Denied Michigan Homeowners Insurance

Why Insurance Companies can deny you Michigan homeowners Insurance

The Michigan Essential Insurance Act prohibits insurance companies from denying you Michigan homeowners insurance coverage 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.
  • If you use the property, you want to insure it for illegal or dangerous purposes.
  • Your home has a physical condition that presents a likelihood of a significant loss (such as a bad roof)
  • You have had a claim denied within the past five years based on fraud or arson.
  • You don’t want to buy the minimum coverage required for the type of policy you want.

Companies can also refuse to write new policies based on the physical condition of their property, adjacent hazards, and property vacancies. Companies may not renew policies if you have had a negligent liability claim in the past three years. 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

Suppose you need help getting Michigan homeowners insurance through the regular market. You can get a  Michigan Basic Property Insurance Association (MBPIA) quote in that case.  Michigan Basic is a state-run, not-for-profit organization that provides property insurance to qualified Michigan residents who can’t get Michigan homeowners insurance from another company. If you are eligible, you can get a standard HO-2, HO-3, or Dwelling policy from Michigan Basic.

To qualify for Michigan homeowners insurance with Michigan Basic Insurance

You need to own or rent and live in qualified property.

  • “Qualified Property” means a residential property that meets building code standards.  You cannot use the property for farms, business reasons, or illegal activities.

MBPIA will inspect your property at no cost to determine if it qualifies. If it does not, they will provide a written explanation of why and what you need to do to make it eligible. MBPIA policies are for one year; they can renew them for up to two years without another inspection. Michigan Basic can schedule inspections after two years at their discretion. If you need extra repairs, MBPIA can issue a temporary binder for up to 60 days. The binder will insure your property while waiting for inspection or making 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. The insurance company will replace them with drywall if you currently have plaster walls.  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 learn more about Michigan homeowners insurance policies, read our article Understanding Michigan Homeowners insurance. 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.