Insurance Lecturer — While many states in America abide by similar rules in terms of homeowners insurance, Michigan has actually passed a few distinctive laws that were set forth in order to protect the interests of homeowners throughout the state.
In 1979, Michigan developed a law called the Michigan Essential Insurance Act. This act makes reasonable homeowners insurance rates and policies available to all homeowners, unless they do not meet certain criteria.
The criteria for exclusion from eligibility for insurance includes being guilty of an arson charge in the last five years, fraudulent arson charges on another homeowners policy in the past five years, or the home to be insured is used for illegal or dangerous purposes.
Other reasons from being excluded include the policy owner refusing to pay the minimum required coverage, within the last two years the policy owner’s insurance has been cancelled because of non-payment, taxes on the property to be insured are over two years past due or the insurance a homeowner wants to buy requires them to be a member or a group or organization.
Another unique law to Michigan homeowners that is currently being debated in the Michigan legislature is the rule that will eliminate the use of credit scoring in setting premiums on homeowners insurance.
Currently credit scoring isn’t allowed under Michigan law to judge individual homeowners and the premiums they will receive. This keeps those with lower credit scores from being penalized.
State law in Michigan allows for the state to set forth rules that regulate the standards by which individual insurance company offer rates and premiums.
This does not mean that all insurance companies will have the same rates throughout the state, as there are different rules that apply to different situations, but this does regulate the over inflation of insurance rates throughout the state.
Some of the rate factors throughout Michigan include the type of home (brick, wood or vinyl), the age of the home, the physical condition of the home, number of years the homeowners has been insured by the same company, and whether the homeowner has other policies, such as automotive insurance, through the same company.
Michigan also allows for homeowners to receive better rates if they are using a group policy rather than an individual policy. Group policies can be offered to employees by a business or to member of a club or organization.
Most group policy members will be offered the same coverage as individual homeowners, although the coverage will vary from insurance company to insurance company.
Although Michigan law does not require homeowners to go through the National Flood Insurance Program in order to purchase flood insurance, most insurance companies do not offer flood insurance as part of the basic policy coverage.
As floods can become a major factor in the winter and spring months with melting snow and ice or even excessive rain, it is important to look into whether or not your home is in a flood plain area.
While many policies will not offer extensive coverage for flood damage, they will offer enough to cover at least $5,000-$10,000 worth of damage.
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