What Is Michigan Basic Insurance? Who Should Buy It?
Find Cheap Homeowners Insurance Quotes in Michigan
Basic property insurance is sold by the Michigan Basic Property Insurance Association (MBPIA), a state-run organization designed to provide property insurance to Michigan homeowners and renters who are unable to buy it from standard insurance companies. Homeowners most commonly turn to Michigan basic insurance when typical insurance companies decline to insure a high-risk property or offer prohibitively expensive quotes.
Who should consider buying Michigan basic property insurance?
Anyone unable to get property insurance because of being denied coverage or quoted prohibitively high rates should consider it.
Michigan's basic property insurance is the state's Fair Access to Insurance Requirements plan. It's considered part of the residual insurance market and a nationwide set of programs designed to help homeowners insure high-risk homes.
Reasons for home insurance denial in Michigan
Per Michigan State law, if a company denies you home insurance, they must explain the reason in writing. The decision cannot be based solely on your home's location, age or neighborhood.
Possible reasons home insurance companies in Michigan may deny coverage:
- Within the past five years, you were convicted of arson, use of explosives or destruction of property.
- Within the past five years, you were denied a home insurance claim due to evidence of arson, use of explosives or destruction of property.
- The property is used for illegal or dangerous purposes.
- You refuse to meet the minimum required coverage amount.
- Within the past two years, your home insurance was canceled for premium nonpayment.
- The dollar value of the property is below certain minimums.
- The property taxes are more than two years overdue.
- You are not a member of the organization for whom the insurance is exclusively available (such as AAA or a labor union).
- Your property is in poor physical condition.
- Your property is not occupied.
- Your property is in close proximity to a notable hazard, such as a large body of water.
Or maybe the quotes you received from a regular insurance company were prohibitively high due to certain risk factors. This could include a high likelihood of your home being destroyed by a disaster, which is less common in Michigan than coastal states like Florida or Texas, or based on crime statistics. If that's the case, you may be able to find a more affordable rate from the MBPIA than the regular home insurance market.
However, it's worth noting that the MBPIA rates are generally equal to — or greater than — the rates available from private companies. This is to encourage homeowners to consider a Michigan basic insurance plan only as a last resort.
It's essential that you shop around to find the best insurance company for you.
What does Michigan basic insurance cover?
Coverage types available from the MBPIA include standard-form homeowners insurance (HO-3), renters insurance (HO-4), condo/co-op insurance (HO-6) and basic-form homeowners insurance (HO-2). Get a full breakdown of what's included in each type of insurance.
The MBPIA also allows customers to buy supplemental coverage for specific types of water damage.
Additionally, customers can choose from "actual cash value," "replacement value" or "repair value" coverage. An actual cash value policy will have the lowest premium but provide the lowest payout for a claim. A replacement value policy provides the most generous coverage but will cost the most monthly.
A repair value, or market value, policy falls between these two and is worth considering if you have a home with older construction or features you're not concerned about preserving.
Replacement type | Details | Claim example | Good for… |
|---|---|---|---|
| Actual cash value | Pays the depreciated cost of the property or item | Dishwasher bought new for $500 three years ago; paid out current value of $200 | Lower premiums |
| Replacement value | Pays the cost of a new, identical item | Dishwasher bought new for $500 three years ago; replaced for full value of $500 | Greatest peace of mind |
| Repair/market value | Pays the cost of a new, identical item or the equivalent using "contemporary materials" (whichever is cheaper) | Antique table bought 40 years ago for $50, with a current value of $2,000; replaced with a modern version for $500. | Compromise between cost and comfort, especially if you have items with a high replacement value |
As is true for most residual market insurance companies, the extra coverages, benefits and discounts available from the MBPIA are somewhat limited, compared with typical companies' offerings.
For example, you won't qualify for discounts for bundling home and auto insurance, purchasing eco-friendly technology or being claim free for multiple years. So make sure you shop around before turning to MBPIA. You may be able to find a company that can provide you with a wider range of services.
How to buy Michigan basic insurance
Find Cheap Homeowners Insurance Quotes in Michigan
Michigan basic insurance is only available through licensed independent insurance agents. To get an MBPIA quote, contact a local independent insurance agent, who will submit a quote request on your behalf. They'll also request quotes from other insurance companies for you.
If you're considering a Michigan basic insurance plan because you're unable to get affordable coverage from another company, first shop around at several of the best insurance companies in Michigan. MBPIA insurance usually isn't the cheapest option, even if some insurance companies aren't willing to cover you.
Michigan basic property insurance eligibility requirements
If you decide MBPIA coverage is the best option for you, you'll need to meet a few qualifications, which are fairly straightforward. You must own or rent a property that meets Michigan's building codes and is not used for farm, business or illegal activities. You may also be required to have your property inspected to verify that it meets these requirements, but the inspection is free.
If you do not meet the requirements, you will receive a written notice explaining why and what you can do to make the property meet the qualifications.
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