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Michigan homeowners insurance

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Michigan

Whether you’re a new homeowner buying insurance or you’re shopping your existing policy, you can’t make smart choices unless you know the basics about home insurance coverage. We’ll explain here everything you need to know to buy the right amount of Michigan home insurance at the best price. We outline average Michigan homeowners insurance rates by ZIP code, coverage level and company. That means you can anticipate how much it will cost and won’t overpay for it.

Let Insurance.com help you find affordable home insurance now.

What is the average cost of home insurance in Michigan?

Michigan’s average home insurance rate is $1,073, which is fairly close to the national average of $1,288. Michigan’s average rate is $155 less than the nationwide average, or 13 percent lower, for the coverage level of:

  • $200,000 dwelling coverage
  • $1,000 deductible
  • $100,000 liability

Below are average home insurance rates for the state’s largest cities for the above coverage level. You’ll see that Detroit and Flint homeowners pay the most in the state:

  • Detroit – $2,038
  • Grand Rapids -- $893
  • Warren – $1,151
  • Sterling Heights -- $985
  • Ann Arbor -- $794
  • Lansing -- $864
  • Flint -- $1,574

What you need to know about buying Michigan home insurance

Here are the basic components of a home insurance policy that you decide the coverage amount for:

  • dwelling
  • liability
  • medical payments

The limits of your coverage for the following are typically a set percentage of your dwelling coverage limit as shown below:

  • other structures – 10 percent
  • personal property – 50 percent
  • loss of use – 20 percent

Liability insurance covers the medical expenses of people who are hurt while in your home or on your property, as well as damage caused to neighbors’ property. It applies to cases where you are at fault for the incident. Personal liability also covers legal fees if you are sued, as well as any resulting judgments from a lawsuit, up to your policy limits.

Most home insurance policies come with $100,000 in personal liability insurance but this is rarely enough coverage. The cost to defend a lawsuit or to pay for medical expenses for a serious injury can easily exceed that amount. Most experts recommend upping your limits to at least $300,000. 

Medical payments also pays for injuries to guests in your home but differs from liability in that it applies to injuries regardless of who is at fault. Personal liability coverage applies only in cases where you are found legally responsible for the loss, and the limits are much higher. Medical payments is typically for $1,000 or $5,000.

Dwelling coverage pays to repair your home. When buying home insurance, you should insure your home based on its replacement cost. That’s the amount you need to rebuild it if damaged or destroyed, and not its market value, which is what you could sell your home for in its current condition. Replacement cost offers more protection because the cost of building a home often exceeds its market value.

When shopping for a policy, you will have to choose a “dwelling coverage” amount. You should select a dwelling coverage limit that best matches the cost to repair damage to your home or rebuild it completely at equal quality — at current prices. You can calculate your replacement cost by using online calculators or hiring an appraiser to give you a replacement cost valuation or by doing it yourself.

You will also need to select a deductible, which is the amount you pay before your insurance kicks in. For example, if your home has $3,500 worth of damage, and you have a $500 deductible, you pay the first $500 out of pocket before your insurance coverage kicks in for the rest ($3,000).

Some deductibles are based on dollar amounts, such as $500 or $1,000. Others are based on a percentage of your home's value. If your home is insured for $200,000 and your deductible is 2 percent, you will owe $4,000 before insurance coverage pays out.

You  choose a home insurance deductible amount, which applies to claims for damage to your home or belongings, but not if you’re sued or a medical claim is filed by someone in your home. Typically, deductible amounts are $500, $1,000, $1,500, $2,000 and $2,500.

Michigan homeowners insurance rates by ZIP code

Detroit is the most expensive place to insure a home in Michigan.

Insurance.com analyzed home insurance rates from major insurance companies for nearly every ZIP code in Michigan. For $200,000 dwelling coverage with a $1,000 deductible and $100,000 liability limits, the average rate of $2,360 in Detroit ZIP code 48213 is the highest in the state.  ZIP code 48104 in Ann Arbor is the cheapest at $756.

By entering your ZIP code and choosing a deductible, dwelling and liability amount, you’ll see the average home insurance rate for that area, as well as the highest and lowest premium fielded from major insurers. This will give you an idea of how much you can save by comparing home insurance rates. For example, for ZIP code  48902 in Warren, which matches the state average rate of $1,073, the highest rate ($1,831) is $1,217 more than the lowest ($614). That means you can save more than $1,200 just by comparing rates and shopping around.

Michigan home insurance rates by company

It's crucial to shop around for the best home insurance rate, because prices for the same coverage vary by hundreds of dollars. If you don’t compare rates, you could wind up overpaying.

Many key factors influence home insurance prices. Among others, the Insurance Information Institute (III) cites the following:

  • Your home's square footage
  • Building costs in your area, and your own home's construction, materials and features
  • Local crime rates
  • The likelihood of certain types of disasters, such as hurricanes

So, shop around for the right policy. The Insurance Information Institute (III) suggests getting at least three price quotes when shopping for coverage, and says that doing so can save you up to hundreds of dollars annually.

Although Michigan home insurance costs can be expensive, it's a mistake to cut corners in an attempt to save. III recommends that you get enough insurance to cover the costs to:

  • Repair or replace the structure of your home and personal possessions
  • Defend yourself against liability costs if someone is hurt on your property
  • Pay for a temporary place to live while your home is repaired or replaced

Who has the cheapest Michigan home insurance?

Below are home insurance rates by company for six coverage sets. Based on our rate analysis, you’ll see Allstate is the cheapest insurance company in Michigan for the coverage levels analyzed.

Home insurance: Michigan average rates by company for six coverage levels

$200,000 dwelling/$1,000 deductible/$100,000 liabilityRate
Allstate$789
Automobile Club$820
Hanover$935
Auto Owners$957
Michigan Farm Bureau$985
Farmers$1,289
State Farm$1,387
Liberty Mutual$1,423

 

$200,000 dwelling/$1,000 deductible/$300,000 liabilityRate
Allstate$828
Automobile Club$832
Hanover$944
Auto Owners$962
Michigan Farm Bureau$991
Farmers$1,304
State Farm$1,402
Liberty Mutual$1,452

 

$300,000 dwelling/$1,000 deductible/$300,000 liabilityRate
Allstate$1,196
Automobile Club$1,237
Michigan Farm Bureau$1,420
Hanover$1,420
Auto Owners$1,548
Liberty Mutual$1,548
Farmers$1,786
State Farm$1,879

 

$400,000 dwelling/$1,000 deductible/$300,000 liabilityRate
Allstate$1,530
Automobile Club$1,716
Hanover$1,828
Michigan Farm Bureau$1,915
Liberty Mutual$2,086
Farmers$2,188
Auto Owners$2,242
State Farm$2,382

 

$500,000 dwelling/$1,000 deductible/$300,000 liabilityRate
Allstate$1,871
Automobile Club$2,141
Liberty Mutual$2,363
Hanover$2,363
Michigan Farm Bureau$2,416
Farmers$2,760
Auto Owners$2,896
State Farm$2,975

 

$600,000 dwelling/$1,000 deductible/$300,000 liabilityRate
Allstate$2,130
Automobile Club$2,561
Liberty Mutual$2,607
Michigan Farm Bureau$2,888
Hanover$2,900
Farmers$3,099
State Farm$3,507
Auto Owners$3,534

Best home insurance companies in Michigan 

As you saw above, you can save a lot by shopping around for home insurance.

Make sure to get quotes for the same coverage levels and deductibles so you can compare policies properly. It's also wise to research each company to make sure you're comfortable with the insurer. You can start by looking at Insure's Best Home Insurance Companies.

Once you're ready, get quotes from at least three home insurance companies. Also, remember the cheapest company isn't always the best. Here are how major home insurance companies in Michigan rank overall for claims handling, customer service, value and renewal recommendation, based on a 2017 survey of 3,160 customers. Scores out of 100.

CompanyScore
AIG92.22
USAA91.82
Chubb91.62
Liberty Mutual91.04
Esurance90.45
Erie88.54
Allstate87.72
American Family86.71
Nationwide85.64
Safeco85.10
Hartford84.69
Farmers83.87
Progressive83.54
State Farm83.53
Travelers77.63

Michigan home insurance laws

How do I find the right insurance company?

When shopping for homeowners insurance, it's important to find the right insurance company to meet your needs.

Michigan law does not require you to buy homeowners insurance. However, if you use a mortgage loan to finance your home purchase, your lender likely will insist you buy a homeowners policy, according to the Michigan Department of Insurance and Financial Services (DIFS).

Comparing quotes from at least three insurance companies can help you find the right insurer at the best price, according to the Insurance Information Institute.

DIFS publishes a list of insurers offering coverage in the Wolverine State. You can find the list at the end of the department's guide to homeowners insurance. You can also search for providers at the department's website.

The department also notes that insurance companies must offer you a policy, regardless of where you living in Michigan. "Whether you live in Ionia, Inkster, or Iron Mountain, every company writing homeowners insurance has a rate for you, and must provide coverage," according to the department website.

Sometimes, a history of complaints against an insurance company can give you crucial insights into whether the insurer is right for you. To check out complaint information against insurers operating in Michigan, stop by the DIFS website and look at its insurance complaint statistics and ratios.

These ratios help you to compare the complaint history of insurance companies of many different sizes to get an accurate gauge of past customer experiences.

Which factors can insurance companies use in setting rates?

Michigan state law determines which factors may be used to set insurance rates. They include:

  • Type of house -- wood or brick
  • Age of the home
  • Physical condition of the home
  • Security and safety devices, such as burglar alarms or smoke detectors
  • Distance the home is from a fire hydrant

Each year, insurance companies operating in Michigan are required to provide policyholders with a description of the ratings classifications used in setting rates. This information must be disclosed upon request.

Insurance companies selling policies in Michigan also must have a process in place so policyholders can dispute what they believe to be an incorrect premium. The insurance company then must review the rate. If the policyholder is not satisfied with the results of the insurer's review, he or she can ask DIFS to make its own review of the rate.

What if I can't get homeowners insurance in Michigan?

The Department of Insurance and Financial Services notes that "almost every person in Michigan" is eligible to purchase homeowners insurance. Still, some people might find themselves unable to land a homeowners insurance policy in Michigan. This can occur for various reasons, including but not limited to:

  • You have been found guilty within the past five years of certain crimes, such as arson or fraud.
  • You have failed to pay insurance premiums in the past two years and have had a policy canceled as a result.
  • You are buying a home in especially poor condition.

Find out more in the DIFS publication "Homeowners Insurance: Are You Eligible?"

If you are unable to purchase a policy directly from an insurance company, contact an insurance agent and ask to apply to the Michigan Basic Property Insurance Association. The Michigan Legislature created the MBPIA in 1968 as an insurer of last resort for homeowners who cannot find other coverage.

The DIFS notes that these policies might cost more than a policy purchased directly from an insurer. For more information, call 313-877-7400.

Where do I file a complaint?

You might end up disputing how your homeowners insurance company handled a claim. If you have a dispute with your insurer, the Michigan Department of Insurance and Financial Services can help. The Office of Consumer Services can investigate your complaint and try to help resolve it, or at least explain your options.

The department encourages you to try to resolve any complaint with the insurance company first. If such efforts fail, visit the DFIS website and fill out an insurance complaint form.

The form includes directions for how to file a complaint. Among other things, you'll need the name of the insurer and agent involved in the dispute, and policy and claim numbers. You'll also need to include a history of previous communications regarding the dispute, and copies of all documents relevant to the dispute.

Which statements are insurance companies prohibited from making in Michigan?

Except in rare circumstances, insurance company representatives are not allowed to say certain things to you. Call the DFIS at 877-999-6442 if you hear any of the following:

  • We don't write in that area.
  • We aren't taking any new customers.
  • We don't have an agent in your area.
  • Your house is too old.
  • We can't write your homeowners insurance unless you insure your automobile with us.
  • You aren't eligible for a policy with our company (no explanation of ineligibility is provided), but we can place you with Michigan Basic (MBPIA).

Why do I need flood insurance?

Michigan ranked 18th among all states and the District of Columbia in flood damage claims paid out during 2016. The state had nearly 22,039 flood insurance policies in force as of the end of March 2017, according to the Federal Emergency Management Agency.

Homeowners insurance does not cover damages associated with floods. Instead, you need to purchase a flood insurance policy through the National Flood Insurance Program. A typical policy costs $400 annually nationwide, according to III. An NFIP policy covers up to $250,000 in damages to the structure of the home, and up to another $100,000 for personal possessions. 

Homeowners in the Wolverine State might be tempted to skip flood insurance, but that can be a costly mistake. Floods are the No. 1 type of natural disaster in the U.S., according to III. In addition, about 90 percent of all natural disasters involve some form of flooding, according to the Federal Emergency Management Agency.

Methodology:

Insurance.com in 2016 commissioned Quadrant Information Systems to field home insurance rates from major insurers in each state for nearly all ZIP codes in the country for 75 coverage levels based on various dwelling and deductible limits. The homeowner profile is a 35-year-old married applicant with excellent insurance score; new business HO3 policy for house built in 2000 with frame construction and composition roof. Other Structures: 10%. Loss of Use defaulted: 10%. Personal Property defaulted: 50%. Guest Medical limit: $5,000. Personal property: 50% of dwelling coverage for actual cash value.

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