In Michigan under the essential insurance act you cannot be denied insurance coverage solely because of the age of your house, its location or the type of neighborhood you live in. However you can be considered ineligible and denied coverage for these reasons:
- Taxes on your property are over 2 years past due.
- Within the past 5 years, you have been found guilty of a crime of arson, the use of explosives or destroying property.
- The property you want to insure is used for illegal or dangerous purposes.
- If your home has a physical condition which presents an extreme likelihood of a significant loss (such as a bad roof)
- Within the past 5 years you have been denied a claim 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 during the past 3 years there is a liability claim in which the insured was negligent, 3 property claims of any type totaling over $4000 ($3000 if they are non weather related) or if the insured fails to correct a dangerous condition after being notified by the company.
If you are unable to get homeowners insurance through the regular market, you can ask a local Michigan agent to apply to the Michigan Basic Property Insurance Association (MBPIA). Michigan Basic was created to provide property insurance to qualified individuals who can't get insurance with another company. If you are qualified, you can get a standard HO-2 or HO-3 policy from Michigan Basic which is the same policy as a regular company.
To qualify with MBPIA
- You need to own or rent and live in a qualified property
- "Qualified Property" means residential property which meets building code standards, is not used for farm or business reasons and is not used for illegal activities.
In order 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 issued for 1 year, which can be renewed on a qualified property for the next two years without another inspection, which could be scheduled at MBPIA's discretion. If work is required MBPIA can issue a temporary binder for up to 60 days that will insure your property while you are waiting for an inspection or making the repairs to qualify your property.
Michigan Basic offers two types of homeowner's 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 it will be replace with plaster walls. In order 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 type of 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. This means that if you have plaster walls the walls will be replaced with drywall. In order to buy this type of policy, you must buy an amount of insurance equal to the market value. In general this type of policy provides less coverage than a Replacement cost policy.
Most MBPIA policies have to be sold through a local Michigan agent if you have been denied coverage through a regular carrier then contact a local Michigan agent to see if you will be eligible for a MBPIA policy.