Your Guide To Homeowners Insurance - Michigan
Your Guide to Homeowners Insurance – For Michigan ConsumersPage 1
Your Guide to Homeowners Insurance – For Michigan ConsumersPage 2
Table of ContentsPage 4Page 5Page 6Page 7Page 8Page 9Page 10Page 12Page 13Page 14Page 15Page 16Page 17Page 20Page 21Understanding Your Homeowners Insurance PolicySample of a Declarations PageInsurance EligibilityTypes of PoliciesSettlement Options Found in Homeowners PoliciesTypes of CoverageExtra Coverages You Can PurchaseUnderstanding Rates and PremiumsWays to Reduce Your PremiumIf You Experience a LossShopping for CoverageFiling a Complaint with DIFSInsurance WorksheetsHomeowners Insurance Company Web AddressesGlossary of Common Homeowner Insurance TermsThis Consumers Guide is a publication prepared by the Michigan Department of Insurance andFinancial Services (DIFS). You can view more publications by visiting DIFS’ website atwww.michigan.gov/difs.Any insurance consumer who needs help with an insurance problem or question can call DIFSfor assistance toll-free at 877-999-6442.Your Guide to Homeowners Insurance – For Michigan ConsumersPage 3
Understanding Your Homeowner’s Insurance PolicyYour insurance policy is a contract between you and your insurance company. It specifies what thecompany agrees to do in exchange for the premium you pay. It also describes your responsibilities andthe terms of coverage. The contract is divided into two basic sections: a declarations page and thepolicy itself.The Declarations PageThe declarations page is usually the first part of an insurance policy and includes basic details of theagreement such as: Name of the insurance companyName(s) of the person(s) insuredLocation of the insured residenceThe policy numberProperty coveredCoverages purchasedLimits of liability for each coverageApplicable deductibles andYour premiumThe PolicyThe second part of your insurance contract is the policy itself. This includes: Insuring agreementsDefinitionsConditions*Section I of your policy describes your property coverages and the perils it covers. Section IItypically includes: Liability coverage (protectionagainst claims someone elsemakes against you)Premises medical coverage oraccidental injury coverage (paysthe medical expenses of othersaccidentally injured on yourproperty)Each section includes coverages,limitations, exclusions, definitions, andconditions that apply only to thatsection.Your Guide to Homeowners Insurance – For Michigan ConsumersPage 4
Sample Declarations PageYour Guide to Homeowners Insurance – For Michigan ConsumersPage 5
Insurance EligibilityMichigan law defines an “eligible person” for homeownersinsurance as a person who is the owner living in, or a tenant of,one of the following types of dwellings: a house, condominiumunit, cooperative unit, room, apartment, or a multiple unitdwelling of not more than four residential units.However, you may still be considered “ineligible” and can beturned down for insurance if:If you are eligible underthe law you cannot bedenied insurance solelybecause of the age ofyour house, its location,or the type ofneighborhood you livein. Within the past 5 years you have been found guilty ofarson or of an attempt to commit arson, the use ofexplosives, or destroying property. Within the past 5 years you have been denied paymentby an insurer of a claim under a home insurance policybased on evidence of arson, fraud, or conspiracy tocommit arson or fraud. The property you want to insure is used for illegal or dangerous purposes. Taxes on the property you want to insure are 2 or more years past due. You refuse to buy the minimum amount of coverage required for the type of policy you want. Your home has a physical condition which presents an extreme likelihood of a significant lossunder a home insurance policy. Within the past 2 years your home insurance has been canceled because of non-payment ofpremium, unless you pay the entire premium in full before the issuance or renewal of the policy. A company requires you to be a member of a group, club, or organization and you choose notto join or maintain membership. If the value of the property you want to insure does not meet the minimum requirements for thetype of policy you want to buy.If you find that you are ineligible for home or renters insurance, you may want to ask your agent to applyto the Michigan Basic Property Insurance Association (MBPIA). The MBPIA was created by the statelegislature to provide property insurance to persons who cannot find insurance in the regular market.Any licensed agent can help you obtain insurance through the MBPIA.Do I Have to Carry Insurance on a Home?Unlike some other insurance coverages, you are not required by law to purchase homeownersinsurance. However, if you are financing your home, your lender will require you to purchase insuranceto protect its financial interest. Lenders will buy an insurance policy to cover your home if you don’tmaintain insurance coverage in accordance with the terms of your loan agreement. The loandocuments you sign may require you to maintain coverage. If coverage is required but not maintained,the lender will place coverage on the property called force-placed insurance, to protect their interestin the property and charge you for this coverage.The loan documents will spell out specifically what must be covered and how proof of coverage is to besubmitted to the lender or the company servicing the loan. If your home is not being financed, you mayYour Guide to Homeowners Insurance – For Michigan ConsumersPage 6
choose not to purchase homeowners insurance, but you will be assuming all the risk to replace yourhome and possessions if they are damaged.Types of PoliciesThe main types of homeowners insurance are:Broad (HO-2) covers damage to thedwelling and possessions from specificperils listed in the policy such asexplosion, fire, lightning, windstorm, hail,riot, civil commotions, theft, vandalism,falling objects, smoke, and damagefrom a vehicle or aircraft. “Broad” formpolicies are also known as “namedperil” policies.All Risk (HO-3) is the most common typeof homeowners policy. The dwelling iscovered against all risks or perils exceptthose specifically excluded in thepolicy. The home’s contents aregenerally covered against namedperils.Renters (HO-4) policies provide coverage on the renter’s personal property if it is stolen, damaged, ordestroyed in a home or apartment. Personal property is covered against named perils, and losses aresettled on an actual cash value basis unless the renter purchases replacement cost coverage. Renterpolicies do not cover the house or apartment building or any detached structures.Condominium (HO-6) policies provide coverage similar to a renter’s policy since the limit chosen is basedon the value of the owner’s personal property or contents.An HO-6 policy also provides coverage for that part of the dwelling that belongs to the condominiumowner; this includes alterations, appliances, fixtures and improvements that are part of the building orare contained within the building. Both the dwelling and the contents are covered against named perils.Additional coverage may be added to a policy through attachments known as endorsements, floaters,or riders to extend protection to specific items you own. Ask your insurance agent about buyingendorsements for an additional premium if you would like more coverage than your policy provides. Theavailability of endorsements varies by company.Other Types of PoliciesMobile homeowners policyPolicies are similar to those of conventional homes but have additional provisions specific to mobilehomes. They usually include the cost of moving your home to avoid damage from floods, windstorms,and other perils.Your Guide to Homeowners Insurance – For Michigan ConsumersPage 7
Farm or ranch policyPolicies are similar to those of homeowners but include special additions for farm or ranch buildingsand equipment.Travel trailers, camping trailers, and motor home policyThey are insured under automobile, recreational vehicle, or special policies.Settlement Options Found in Homeowners PoliciesIt is important to know the difference betweenreplacement cost, repair cost, and actualcash value when it comes to insuring both yourhomeandyourpossessions.Mosthomeowners insurance policies will give youthe choice to cover contents on areplacement cost basis or an actual cashvalue basis. However, there are also policiesavailable that provide for settlement on arepair cost basis.Replacement cost is the cost to replace, repairor rebuild your home to its original conditionwith materials of the same kind and quality if itis damaged or destroyed. For example, a hardwood floor would be repaired or replaced with hardwoodrather than a laminate or other material. Replacement cost coverage pays the full cost of replacingyour property, minus your deductible, and up to your policy’s dollar limit. A standard homeowners policycontains a limit on the replacement value. If your limit is less than what it would take to rebuild your homeat current construction material and labor costs, you may want to increase your policy limit.Repair cost is the cost to replace, repair or rebuild damaged dwellings to a similar condition, usingcontemporary materials. For example, plaster walls may be replaced with drywall. The maximum amountthe insured is able to collect may not be enough to repair or replace the property to its original condition.Make sure you discuss the coverage in detail with your insurance agent to ensure that you understandthe loss settlement provisions thoroughly.Actual cash value is the replacement cost of the property at the time of loss minus depreciation. Thismeans the insurance company will subtract an amount for depreciation from the value of yourpossessions before paying your claim. For example, actual cash value on a 10-year-old television mayonly be 50. Replacement cost is what it would cost to replace it with a similar model today, which wouldbe substantially more than 50. Replacement cost minus depreciation equals actual cash value.Your Guide to Homeowners Insurance – For Michigan ConsumersPage 8
Types of CoverageThere are seven major coverage parts of a typical policy: Coverage A, B, C, D, E, F and G. The coverageparts are complex with many exclusions and limitations. Price is only one factor to consider whenselecting your insurance. Consider purchasing homeowners insurance at a sufficient level so that, if thereis a need to file a claim, there are no surprises or gaps in your coverage.Dwelling (Coverage A)This coverage protects against loss to the dwelling. Except for repair cost policies, a loss which occurs toan insured dwelling is typically settled on a replacement cost basis.Appurtenant Structures (Coverage B)Other structures on the property, such as a detached garage, tool shed, barn, or swimming pool areusually covered for up to 10% of the dwelling amount with no extra premium charge.Personal Property/Contents (Coverage C)This coverage protects against loss to personal property in amounts which vary, depending on the policyform type. Covered loss of personal property is usually settled on an actual cash value basis. However,many companies offer replacement cost coverage on personal property for additional premium.Off-Premises LossThere is also protection against loss to personal property while away from the premises, such asproperty left in a car or hotel room. Usually the coverage is limited to 10% of the total contentscoverage amount.Special ItemsThere are special limits on coverage for certain items such as money, jewelry, computers, or furs.These limits vary by company and do not increase the total amount of coverage under the policy.Additional Living Expenses (Coverage D)The additional living expenses portion of your homeowners insurance policy pays for extra expenseshomeowners incur if they have to live away from their home following an insured risk. Expenses paidinclude hotel or apartment bills, restaurant meals and even lost rent if you rent out part of your house.Coverage for additional expenses is typically 20% of the insurance on your house.Liability (Coverage E)This coverage provides protection in the event you become legally obligated to pay for bodily injury orproperty damage. For example, if you were sued by someone injured on your property, this coveragewill pay to defend you and provide coverage if you are determined to be liable.Medical Payments (Coverage F)This coverage pays for immediate care, such as first aid, ambulance charge, etc., for someone who ishurt on your property. The amount of coverage offered depends on the company.Property of Others (Coverage G)Replacement cost coverage is provided for physical damage to the property of others that is causedby the insured. The amount of coverage is dependent on each insurer.Your Guide to Homeowners Insurance – For Michigan ConsumersPage 9
Extra Coverages You Can PurchaseThere are some additional coverages that may be available to purchase through your insurer toenhance your coverage. It is important for you to speak with your agent if you are interested inpurchasing additional coverage for your property.Additional Replacement Cost CoverageAdditional replacement cost coverage for the dwelling may be purchased under certain types ofhomeowners policies. Under this additional coverage, the company guarantees that you will beprotected for the full replacement cost of the house, even if that amount is higher than the policy limit.Some companies refer to this coverage as “extra expense” coverage or “guaranteed replacementcost” coverage. Check with your agent to find out the specific limits of this additional coverage.Debris RemovalIf debris removal expense plus damage to the property is more than the limit of coverage selected, anadditional 5% of the coverage limit may be available for debris removal. This is coverage provided forthe reasonable expense incurred for removal of debris of covered property after a covered loss.Tree RemovalThis coverage will pay to have damaged trees removed; the standard limit is 500. Many companiesrequire the tree to have actually fallen or caused damage to other property due to a covered perilbefore coverage is provided.Trees, Shrubs, and Other PlantsThis coverage will pay the cost to replace damaged trees, shrubs and other plants; the standard limit is 500 per item up to an aggregate limit.Fire Department Service ChargeThis coverage pays expenses when the fire department is called to save or protect covered property;the standard limit is 500.Credit Card, Fund Transfer Card Forgery, and Counterfeit MoneyThis coverage protects against the fraudulent use of credit cards or fund transfer cards (money machine)or reimburses you if you accidentally receive counterfeit money; the standard limit is 500.Ordinance and Law CoverageThis provides extra coverage if your home is partially damaged and cannot be rebuilt to its originalcondition because of changes in the local building codes. The insurance company will not pay for theupgrades unless you have this additional coverage. The standard limit is 10% of the total dwellingcoverage amount, but some companies will allow you to purchase larger amounts.Personal Property EndorsementsThese endorsements provide extra insurance, up to the value of the insured property, for items thatexceed the amount listed for such property in your regular policy. You may need to purchase thisadditional coverage for items such as expensive jewelry, cameras, collections, laptop computers, or rareantiques. Most insurers require you to have such items appraised to determine their value at the timeyou purchase the insurance.Your Guide to Homeowners Insurance – For Michigan ConsumersPage 10
Water Backup and Sump Pump OverflowRead your policy carefully for coverage and exclusions relating to water damage. You may need topurchase additional coverage for damage resulting from water backup and sump pump overflow.Flood InsuranceYour regular homeowners insurance policy does not contain coverage for flood damage toyour home and contents. In order to have coverage in the event of a flood, you must purchasean additional flood insurance policy. Your agent should be able to advise you about how topurchase this coverage as well as the amount of coverage you need. You may also call theNational Flood Insurance Program for more information at 800-427-4661 or visit www.floodsmart.gov.Private flood insurance may also be available.Your Guide to Homeowners Insurance – For Michigan ConsumersPage 11
Understanding Rates and PremiumsInsurance companies use rating factors to determine the premium they will charge you for your policy.Rating rules are used to give the company the ability to charge the correct rate for the risk they areinsuring and to apply discounts fairly among their policyholders.In addition to rates, companies develop guidelines called underwriting rules to decide if a risk qualifiesfor coverage. Each company’s guidelines may differ, but their underwriting rules and rates must beapplied uniformly and consistently throughout Michigan.Factors That Affect Your PremiumAn insurance company uses the process of underwriting to determine whether to sell you a policy andwhat premium to charge. Different factors can positively or negatively affect your premium. Insurancecompanies use many factors to determine the amount of premium you pay. These factors may includesuch things as: Amount and type of coverage. Your premiums will increase in relation to the amount of coverageyou choose to purchase to protect your home, property, and assets.Your home’s age and condition. The premium is often higher for an older home or one in poorcondition than it is for a newer home in good condition.Your claim history. Your claim history includes both the type and the number of claims filed. Yourhistory of filing claims for water damage, fire, theft, or liability on homes you have owned is usedby the insurance company to determine what to charge for your coverage.Construction material used in your home. The insurance premium is usually lower for homes builtprimarily of brick or masonry than for wood-frame homes.Availability of local fire protection. Homes in areas with access to quality community fireprotection and a nearby water source usually have lower premiums.Availability of law enforcement or crime prevention services. Premiums may be lower if your homeis in proximity of regular and available law enforcement patrol.Where you live. The law allows insurance companies to divide the state into rating territories.Premiums could be higher for homes in areas with higher crime rates, high storm activity, or higherclaims history.The cost to rebuild your home. If your home is destroyed, your policy will pay to rebuild your home,depending on the policy limit, at current construction material and labor costs. This is not the sameas the purchase price of your home which includes the cost of the land. Your premiums willincrease in relation to the amount of your replacement cost coverage.Your Guide to Homeowners Insurance – For Michigan ConsumersPage 12
Ways to Reduce Your PremiumDiscountsCompanies may offer premium discounts based on factors that are likely to reduce losses or expenses.Each insurance company sets the amount of discounts it offers. Common discounts offered by manycompanies include: Paid in full discount Mature homeowner discount (age of maturity varies by insurance company) Claim free discount Non-smoker discount New home discount Credit-based insurance score discount Multi-policy discount Protective Devices (smoke detectors, fire extinguishers, burglar alarms, heavy duty locks, etc.)Increased DeductiblesYou may want to consider the largest deductible your budget can handle to lower your premium.How Discounts Affect Your PremiumThe example below represents a standard base premium a person may have to pay for a
Your Guide to Homeowners Insurance – For Michigan Consumers Page 7 choose not to purchase homeowners insurance, but you will be assuming all the risk to replace your home and possessions if they are damaged. Types of Policies . The main types of homeowners insurance are: Broad (HO-2) co
4 Homeowners Insurance Homeowners basics Homeowners insurance protects you from the unexpected burden of paying to rebuild your home should disaster strike. It also helps pay: Speak up Take time to go over the details of your policy with your agent. If you think you need more coverage, tell your agent. Compare prices of homeowners insurance from
Whether you live on a farm, or own or rent an apartment, condominium, home or mobile home, your home and its contents are probably your largest and most important investment . A homeowners policy will help you protect your investment . There are different types of homeowners policies available to fit your housing situation . TYPES OF HOMEOWNERS
of Insurance (TDI), the Texas Legislature may consider changes to homeowners insurance regulation during the 2011 regular legislative session. The amount Texans pay for homeowners insurance is estimated to be between 52 and 76 percent more than the national average, depending on the type of policy forms being compared.
Types of Homeowners Insurance Policies Basic Policy Form - Covers your home and personal property, but only if damage or loss is caused by fire, smoke, wind, hail, lightning, explosion, vehicles, civil unrest, theft or vandalism. This policy is sometimes called the HO-1 policy form. It is the most basic homeowners insurance coverage and costs
Michelle Kurtz – Consumer/Homeowners Hurricane Insurance Initiative Steve Simkins – State Farm Wayne Parker – Independent Agent Elizabeth Huntley – Consumer/Attorney Sid Belcher – ALFA Tom Malone – Consumer Jim Higdon – Consumer Joe Ruffer – Engineer, Mobile City/County . J. Gary Ellis, Chair. AFFORDABLE HOMEOWNERS INSURANCE .
Insurance policies can vary. This guide is intended to help you understand homeowners insurance. The information is general and not specific to your insurance policy. If you have specific questions about your coverage, you should
The king's insurance options 5 Things you need to know 7 The stuff you need to do 14 How to claim 16 Our commitment to you 20 Car insurance 22 Car warranty 37 Shortfall cover 45 Scratch and dent 46 Tyre and rim 48 Motorbike insurance 53 Trailer and caravan insurance 64 Watercraft insurance 68 Home contents insurance 77 Buildings insurance 89
transactions: (i) the exchange of the APX share for EPEX spot shares, which were then contributed by the Issuer to HGRT; (ii) the sale of 6.2% stake in HGRT to RTE and (iii) the sale of 1% to APG. The final result is that the Issuer has a participation in HGRT of 19%. For information regarding transactions (i) and (ii) please refer to the press release dated 28 August 2015 (in the note 4 pp .
