Why you can be Denied Michigan homeowners insurance
Michigan homeowners insurance coverage can’t be denied under the Michigan Essential Insurance Act solely because of the age of your house, its location, or where you live. However, insurance companies can deny you coverage an ineligible for these reasons:
- Taxes on your property are over two years past due.
- Within the past five years, you were guilty of arson, the use of explosives, or destroying property.
- The property you want to insure is used for illegal or dangerous purposes.
- Your home has a physical condition which presents a likelihood of a significant loss (such as a bad roof)
- Within the past five years, you have had a claim denied based on fraud or arson.
- You don’t want to buy the minimum coverage required for the type of policy that you want to buy.
Companies can also refuse to write new policies based on the physical condition of your property, adjacent hazards, and property vacancies. Companies may not renew policies if there is a liability claim in the past three years, which the insured was negligent. Three property claims of any type totaling over $4000 or $3000 if they are not weather claims. The insured fails to correct a dangerous condition after being notified by the company.
Michigan homeowners insurance through Michigan Basic Insurance
If you are unable to get Michigan homeowners insurance through the regular market, you can ask a Michigan homeowners insurance agent to apply to the Michigan Basic Property Insurance Association (MBPIA). Michigan Basic was created to provide property insurance to individuals who can’t get Michigan homeowners insurance with another company. If you are eligible, you can get a standard HO-2 or HO-3 policy from Michigan Basic, which is the same policy as offered by a regular company.
To qualify for Michigan homeowners insurance with Michigan Basic Insurance
You need to own or rent and live in a qualified property
- “Qualified Property” means a residential property that meets building code standards, and you do not use it for farm or business reasons or illegal activities.
To determine if your property is “qualified,” MBPIA will have your property inspected (at no cost to you). If MBPIA decides that your property is not qualified, you are entitled to a written explanation of why the property does not qualify and what you need to do to make it eligible.
All MBPIA Policies are for one year, which can be renewed on a qualified property for the next two years without another inspection. Michigan Basic can schedule inspections after two years at their discretion. If you need to make extra repairs, MBPIA can issue a temporary binder for up to 60 days. The binder will insure your property while you are waiting for inspection or make the repairs to qualify your property.
Michigan Basic Insurance offers two types of Michigan homeowners policies
- Replacement Cost Policy– This policy will allow you to replace, repair, or rebuild your damaged property to its original condition, with the same kind and quality materials. That means if you have plaster walls, they will replace your walls with plaster walls. To purchase this type of policy, you must insure your home for an amount of insurance equal to or greater than 80% of what it would cost to replace your property.
- Repair Cost Policy– This policy allows you to replace, repair, or rebuild your damaged property to a condition similar to what it was before the damage, using modern materials. If you currently have plaster walls, the insurance company will replace them with drywall. To buy this type of policy, you must purchase an amount of insurance equal to the market value. In general, this type of policy provides less coverage than a Replacement cost policy.
To understand all the coverage’s on a Michigan homeowner’s insurance policy, read our article Understanding Michigan Homeowners insurance.
You have to purchase a Michigan Basic policy through a licensed Michigan insurance agent. If you have been denied coverage through a regular carrier, click this link to fill out your information to get a Michigan Basic Insurance Quote or call 248-277-4505 to see if you are eligible for a Michigan Basic insurance policy.