Your Guide to Homeowners Insurance – For Michigan Consumers Page 1
Your Guide to Homeowners Insurance – For Michigan Consumers Page 2
Your Guide to Homeowners Insurance – For Michigan Consumers Page 3
Table of Contents
Page 4
Understanding Your Homeowners Insurance Policy
Page 5
Sample of a Declarations Page
Page 6
Insurance Eligibility
Page 7
Types of Policies
Page 8
Settlement Options Found in Homeowners Policies
Page 9
Types of Coverage
Page 10
Extra Coverages You Can Purchase
Page 12
Understanding Rates and Premiums
Page 13
Ways to Reduce Your Premium
Page 14
If You Experience a Loss
Page 15
Page 16
Shopping for Coverage
Filing a Complaint with DIFS
Page 17
Insurance Worksheets
Page 20
Homeowners Insurance Company Web Addresses
Page 21
Glossary of Common Homeowner Insurance Terms
This Consumers Guide is a publication prepared by the Michigan Department of Insurance and
Financial Services (DIFS). You can view more publications by visiting DIFS’ website at
www.michigan.gov/difs
.
Any insurance consumer who needs help with an insurance problem or question can call DIFS
for assistance toll-free at 877-999-6442.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 4
Understanding Your Homeowner’s Insurance Policy
Your insurance policy is a contract between you and your insurance company. It specifies what the
company agrees to do in exchange for the premium you pay. It also describes your responsibilities and
the terms of coverage. The contract is divided into two basic sections: a declarations page and the
policy itself.
The Declarations Page
The declarations page is usually the first part of an insurance policy and includes basic details of the
agreement such as:
• Name of the insurance compan
y
• Nam
e(s) of the person(s) insured
• Location of the insured residenc
e
• T
he policy number
• Property covered
• Coverages purchased
• Limits of liability for each coverage
• Applicable deductibles and
• Your premium
The Policy
The second part of your insurance contract is the policy itself. This includes:
• Insuring agreements
• Definitions
• Conditions
*Section I of your policy describes your property coverages and the perils it covers. Section II
typically includes:
• Liability coverage (protection
against claims someone else
makes against you)
• Premises medical coverage or
accidental injury coverage (pays
the medical expenses of others
accidentally injured on your
property)
Each section includes coverages,
limitations, exclusions, definitions, and
conditions that apply only to that
section.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 5
Sample Declarations Page
Your Guide to Homeowners Insurance – For Michigan Consumers Page 6
Insurance Eligibility
Michigan law defines an “eligible person” for homeowners
insurance as a person who is the owner living in, or a tenant of,
one of the following types of dwellings: a house, condominium
unit, cooperative unit, room, apartment, or a multiple unit
dwelling of not more than four residential units.
However, you may still be considered “ineligible” and can be
turned down for insurance if:
Within the past 5 years you have been found guilty of
arson or of an attempt to commit arson, the use of
explosives, or destroying property.
Within the past 5 years you have been denied payment
by an insurer of a claim under a home insurance policy
based on evidence of arson, fraud, or conspiracy to
commit 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 loss
under a home insurance policy.
Within the past 2 years your home insurance has been canceled because of non-payment of
premium, 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 not
to join or maintain membership.
If the value of the property you want to insure does not meet the minimum requirements for the
type 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 apply
to the Michigan Basic Property Insurance Association (MBPIA). The MBPIA was created by the state
legislature 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 homeowners
insurance. However, if you are financing your home, your lender will require you to purchase insurance
to protect its financial interest. Lenders will buy an insurance policy to cover your home if you don’t
maintain insurance coverage in accordance with the terms of your loan agreement. The loan
documents 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 interest
in 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 be
submitted to the lender or the company servicing the loan. If your home is not being financed, you may
If you are eligible under
the law you cannot be
denied insurance solely
because of the age of
your house, its location,
or the type of
neighborhood you live
in.
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) covers damage to the
dwelling and possessions from specific
perils listed in the policy such as
explosion, fire, lightning, windstorm, hail,
riot, civil commotions, theft, vandalism,
falling objects, smoke, and damage
from a vehicle or aircraft. “Broad” form
policies are also known as “named
peril” policies.
All Risk (HO-3) is the most common type
of homeowners policy. The dwelling is
covered against all risks or perils except
those specifically excluded in the
policy. The home’s contents are
generally covered against named
perils.
Renters (HO-4) policies provide coverage on the renter’s personal property if it is stolen, damaged, or
destroyed in a home or apartment. Personal property is covered against named perils, and losses are
settled on an actual cash value basis unless the renter purchases replacement cost coverage. Renter
policies 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 based
on 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 condominium
owner; this includes alterations, appliances, fixtures and improvements that are part of the building or
are 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 buying
endorsements for an additional premium if you would like more coverage than your policy provides. The
availability of endorsements varies by company.
Other Types of Policies
Mobile homeowners policy
Policies are similar to those of conventional homes but have additional provisions specific to mobile
homes. 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 Consumers Page 8
Farm or ranch policy
Policies are similar to those of homeowners but include special additions for farm or ranch buildings
and equipment.
Travel trailers, camping trailers, and motor home policy
They are insured under automobile, recreational vehicle, or special policies.
Settlement Options Found in Homeowners Policies
It is important to know the difference between
replacement cost, repair cost, and actual
cash value when it comes to insuring both your
home and your possessions. Most
homeowners insurance policies will give you
the choice to cover contents on a
replacement cost basis or an actual cash
value basis. However, there are also policies
available that provide for settlement on a
repair cost basis.
Replacement cost is the cost to replace, repair
or rebuild your home to its original condition
with materials of the same kind and quality if it
is damaged or destroyed. For example, a hardwood floor would be repaired or replaced with hardwood
rather than a laminate or other material. Replacement cost coverage pays the full cost of replacing
your property, minus your deductible, and up to your policy’s dollar limit. A standard homeowners policy
contains a limit on the replacement value. If your limit is less than what it would take to rebuild your home
at 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, using
contemporary materials. For example, plaster walls may be replaced with drywall. The maximum amount
the 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 understand
the loss settlement provisions thoroughly.
Actual cash value is the replacement cost of the property at the time of loss minus depreciation. This
means the insurance company will subtract an amount for depreciation from the value of your
possessions before paying your claim. For example, actual cash value on a 10-year-old television may
only be $50. Replacement cost is what it would cost to replace it with a similar model today, which would
be substantially more than $50. Replacement cost minus depreciation equals actual cash value.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 9
Types of Coverage
There are seven major coverage parts of a typical policy: Coverage A, B, C, D, E, F and G. The coverage
parts are complex with many exclusions and limitations. Price is only one factor to consider when
selecting your insurance. Consider purchasing homeowners insurance at a sufficient level so that, if there
is 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 to
an 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 are
usually covered for up to 10% of the dwelling amount with no extra premium charge.
P
ersonal Property/Contents (Coverage C)
This coverage protects against loss to personal property in amounts which vary, depending on the policy
form 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 Loss
There is also protection against loss to personal property while away from the premises, such as
property left in a car or hotel room. Usually the coverage is limited to 10% of the total contents
coverage amount.
Special Items
There 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.
A
dditional Living Expenses (Coverage D)
The additional living expenses portion of your homeowners insurance policy pays for extra expenses
homeowners incur if they have to live away from their home following an insured risk. Expenses paid
include 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 or
property damage. For example, if you were sued by someone injured on your property, this coverage
will pay to defend you and provide coverage if you are determined to be liable.
M
edical Payments (Coverage F)
This coverage pays for immediate care, such as first aid, ambulance charge, etc., for someone who is
hurt 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 caused
by the insured. The amount of coverage is dependent on each insurer.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 10
Extra Coverages You Can Purchase
There are some additional coverages that may be available to purchase through your insurer to
enhance your coverage. It is important for you to speak with your agent if you are interested in
purchasing additional coverage for your property.
A
dditional Replacement Cost Coverage
Additional replacement cost coverage for the dwelling may be purchased under certain types of
homeowners policies. Under this additional coverage, the company guarantees that you will be
protected 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 replacement
cost” coverage. Check with your agent to find out the specific limits of this additional coverage.
Debris Removal
If debris removal expense plus damage to the property is more than the limit of coverage selected, an
additional 5% of the coverage limit may be available for debris removal. This is coverage provided for
the reasonable expense incurred for removal of debris of covered property after a covered loss.
T
ree Removal
This coverage will pay to have damaged trees removed; the standard limit is $500. Many companies
require the tree to have actually fallen or caused damage to other property due to a covered peril
before coverage is provided.
T
rees, Shrubs, and Other Plants
This 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.
F
ire Department Service Charge
This 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 Money
This 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.
O
rdinance and Law Coverage
This provides extra coverage if your home is partially damaged and cannot be rebuilt to its original
condition because of changes in the local building codes. The insurance company will not pay for the
upgrades unless you have this additional coverage. The standard limit is 10% of the total dwelling
coverage amount, but some companies will allow you to purchase larger amounts.
P
ersonal Property Endorsements
These endorsements provide extra insurance, up to the value of the insured property, for items that
exceed the amount listed for such property in your regular policy. You may need to purchase this
additional coverage for items such as expensive jewelry, cameras, collections, laptop computers, or rare
antiques. Most insurers require you to have such items appraised to determine their value at the time
you purchase the insurance.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 11
Water Backup and Sump Pump Overflow
Read your policy carefully for coverage and exclusions relating to water damage. You may need to
purchase additional coverage for damage resulting from water backup and sump pump overflow.
Flood Insurance
Your regular homeowners insurance policy does not contain coverage for flood damage to
your home and contents. In order to have coverage in the event of a flood, you must purchase
an additional flood insurance policy. Your agent should be able to advise you about how to
purchase this coverage as well as the amount of coverage you need. You may also call the
National 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 Consumers Page 12
Understanding Rates and Premiums
Insurance 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 are
insuring and to apply discounts fairly among their policyholders.
I
n addition to rates, companies develop guidelines called underwriting rules to decide if a risk qualifies
for coverage. Each company’s guidelines may differ, but their underwriting rules and rates must be
applied uniformly and consistently throughout Michigan.
Factors That Affect Your Premium
An insurance company uses the process of underwriting to determine whether to sell you a policy and
what premium to charge. Different factors can positively or negatively affect your premium. Insurance
companies use many factors to determine the amount of premium you pay. These factors may include
such things as:
• A
mount and type of coverage. Your premiums will increase in relation to the amount of coverage
you 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 poor
condition 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. Your
history of filing claims for water damage, fire, theft, or liability on homes you have owned is used
by 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 built
primarily of brick or masonry than for wood-frame homes.
• Availability of local fire protection. Homes in areas with access to quality community fire
protection and a nearby water source usually have lower premiums.
• Availability of law enforcement or crime prevention services. Premiums may be lower if your home
is 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 higher
claims 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 same
as the purchase price of your home which includes the cost of the land. Your premiums will
increase in relation to the amount of your replacement cost coverage.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 13
Ways to Reduce Your Premium
Discounts
Companies 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 many
companies 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 Deductibles
You may want to consider the largest deductible your budget can handle to lower your premium.
How Discounts Affect Your Premium
The example below represents a standard base premium a person may have to pay for an HO-3 policy
(All Risk) if they do not qualify for any discounts. The discount is applied separately, totaled and then
deducted from the base premium. Our example shows how dramatically the premium has changed.
However, you may not qualify for each of the discounts offered in this example or your insurance
company may not offer all of these discounts. The example illustrates how important it is for each
homeowner to shop for coverage with several different companies and inquire about all discounts for
which they may be eligible.
Base Premium
$1,510
Smoke Detector Discount
2%
-30
Deadbolt Lock Discount
2%
-30
Fire Extinguisher Discount
2%
-30
New Home Discount
20%
-302
Auto/Home Multi-policy Discount
17%
-257
Life/Home Multi-policy Discount
5%
-76
Credit-Based Insurance Score 7
6%
-91
Mature Homeowner Discount
3%
-45
Final Premium
$649
T
his company offers several levels of discounts for a new home. For example, a 2-year-old home still has
a new home discount, but it will decline annually until the home reaches 10 years of age at which time
the discount ends. In the example, the applicant received a credit-based insurance score of 7 and a
discount of 6% off the base premium. For this company, a score of 7 is a medium range discount.
However, each company uses a different scoring methodology so be sure to ask your agent about your
insurance score and how it affects the premium you are being quoted.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 14
Home Insurance Discounts by Company
Companies add new discounts frequently. Be sure to ask for a list of discounts that are offered from
each company you are considering for the purchase of homeowners insurance. Most companies
have a cap on the total amount of discounts that a person can use to reduce their premiums.
For example, if you qualify for several discounts that amount to over 90% of the premium, the
company may limit the total amount of discounts you can claim to 50% of the premium.
Prepare Ahead to Ease the Claims Process
Insurance is something you hope you never have to use; but, if you should ever need to file a claim
after experiencing a loss of property from fire, theft, or other cause, take steps now to make the
process of filing a claim easier.
• W
ritten inventory - Create and regularly update a written inventory of your home’s contents. Your
insurance company may have a home inventory checklist available to help you compile an
accurate inventory of your possessions or use the National Association of Insurance
Commissioners’ (NAIC) downloadable home inventory checklist.
• Receipts - Keep copies of receipts to document items purchased, date and cost.
• Video/photographic record - Videotape or photograph the contents of your home and the
exterior from different viewpoints and angles. Include video/photos of each room, closet,
cabinet, drawer, garage, attic, and separate buildings from the residence.
• Document security – Keep your insurance policy, home inventory, appraisals, photos and video
records in a secure secondary location (such as your office or a safety deposit box). Update your
records and documentation annually.
• Appraisals – Have someone appraise your jewelry, antiques, stamps, coins, and other valuable
collectibles.
If You Experience a Loss
• Notify your agent or insurance company immediately and report losses involving theft or crime to
the police.
• Review your policy and ask your agent or insurance company if you have any questions regarding
coverage dollar limits.
• Ask your agent or insurance company what documents, forms, and other data you need to get
your claim processed. Complete and submit all forms in a timely and accurate manner to prevent
claim processing delays.
• Make a detailed list of your damaged property by itemizing your losses. If possible, photograph or
videotape the damage before making any repairs.
• Make only temporary repairs to protect your house and belongings from further damage. Save
the receipts for temporary repairs and submit them to the insurance company for reimbursement.
You should not make permanent repairs until after your insurance company has inspected the
damaged property.
• Tell your agent or insurance company where they can reach you.
• Write down the date, name, and title of the person you spoke with and what was said whenever
you communicate with your insurance company in-person or on the telephone.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 15
Shopping for Coverage
Take the time to shop around for your homeowners
insurance. You may be surprised at how much money you
can save if you pick up the phone or go online to obtain
quotes from several companies. Remember, insurance
quotes are not binding and the actual price is determined
after the insurance company receives your application and
completes the underwriting process, which may include an
inspection of your dwelling.
To get an accurate quote, you will need the following types of information:
Construction materials
Type of floor plan
Number and types of rooms
Type of garage or carport
Total square footage
Fire and security devices
Distance from the nearest fire department and hydrant
Loss history
Questions to ask:
How much would I save if I increase my deductible?
Does coverage include water damage or sewer backup?
What is the difference between flood insurance and water damage or sewer backup
insurance?
Is my coverage replacement cost or repair cost?
Are my dependents living away from home covered under my policy?
Does the policy cover my jewelry, antiques, or special collections?
What other special coverages are available?
What proof do I need in case of loss?
What discounts might I be eligible for?
Your Guide to Homeowners Insurance – For Michigan Consumers Page 16
Filing
a Complaint with DIFS
DIFS provides consumer information and investigates consumer complaints against insurance, banking,
credit union, mortgage and other consumer financial products. DIFS will work to respond promptly and
completely to consumers’ insurance and financial questions and complaints, assist consumers in
resolving those complaints whenever possible, and help consumers understand their options.
DIFS first encourages consumers to attempt to resolve disputes directly with their insurance and/or
financial service entity. If a resolution cannot be reached, DIFS can help try to resolve your dispute.
• Speak with a company representative to try to find a solution.
• Explain the problem in a calm, courteous manner.
• Provide dates, amounts, and as many related facts as you can
.
I
f you still do not agree with the company’s position, ask them to provide a written response. Ask them
to list the specific rules or language in the policy that allow them to deny or exclude coverage.
If you feel that your insurance agent misrepresented what your policy covers, made false statements
to persuade your decision about coverage, or used other dishonest methods, try to resolve the dispute
by speaking directly with the agent.
If you still do not agree with the agent’s position, ask for a written response. Ask the agent to include
policy language, copies of documents you signed when you applied for insurance, or other reasons or
facts, which might support the agent’s actions.
How DIFS Can Help
If you are still dissatisfied after contacting the company or the agent, you may wish to contact DIFS,
Office of Consumer Services, to ask questions or to file a written complaint. For more information please
contact DIFS at 877-999-6442 or visit www.michigan.gov/DIFS
.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 17
Insurance Worksheet for Homeowners
Use this chart to compare the quotes you receive from insurers and to explore the available options. In
order to accurately compare policies, you will need to indicate what each company includes for each
of the coverages in their policy limits. For example, Company A may have a $500 standard deductible,
while Company B may have a $1000 deductible for the same total premium. To make accurate
comparisons you will need to make sure all values are equal or decide which items you are willing to
pay more for if you increase the limit.
Coverage (HO-2 or HO-3)
Company A
Company B
Company C
Company D
Home Repair Cost (HO-2) or
Replacement Cost (HO-3)
dwelling limit
Personal Liability
Deductible
Appurtenant Structures
(unattached garage,
outbuildings, etc.)
Contents:
Replacement Cost (RC)
or
Actual Cash Value (ACV)
Off-premises Contents
Additional Living Expenses
Medical Payments
Property of Others
Discounts Offered by
Company – List each discount
for which you qualify and the
amount it will reduce your
premium.
Annual Premium
*An HO-3 may have either replacement cost or actual cash value settlement options for contents. In order
to make a complete comparison among policies, be sure to identify which settlement option the company
uses for contents. Replacement cost content policies may be more expensive.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 18
Insurance Worksheet for Homeowners (continued)
The chart below lists optional coverages that you can usually purchase for a fee with your home
insurance policy. You will have to determine what coverage is most appropriate for your particular
lifestyle.
Coverage
Company A
Company B
Company C
Company D
Guaranteed Replacement
Cost
$
$
$
$
Ordinance and Law Coverage
$
$
$
$
Debris Removal
$
$
$
$
Credit Card, Fund Transfer,
Counterfeit Money
$
$
$
$
Sewer and Drain Backup
$
$
$
$
Scheduled Personal Property
$
$
$
$
Tree Removal
$
$
$
$
Trees, Shrubs and Other Plants
$
$
$
$
Fire Department Service
Charge
$
$
$
$
Other
Additional Premium:
$
$
$
$
Your Guide to Homeowners Insurance – For Michigan Consumers Page 19
Insurance Worksheet for Renters (HO-4) and Condominium Owners (HO-6)
Coverage (HO-4 or HO-6)
Company A
Company B
Company C
Company D
Dwelling Coverage (HO-6 only)
Contents:
Replacement Cost (RC) or
Actual Cash Value (ACV)
Personal Liability Amount
Standard Deductible Amount
Off-Premises Contents
Additional Living Expenses
Medical Payments
Property of Others
Loss Assessment (HO-6 only)
Discounts Offered by
Company-- List each discount
for which you qualify and the
amount it will reduce your
premium.
These are additional coverage options you can purchase with your HO-4 or HO-6 insurance policy.
Each option will add cost to the standard policy premium. You will have to determine what coverage
is most appropriate for your particular lifestyle.
Credit Card, Fund Transfer,
Counterfeit Money
Scheduled Personal Property
Others
Annual Premium:
Your Guide to Homeowners Insurance – For Michigan Consumers Page 20
Home Insurance Company Web Addresses
Most insurers offer websites which allow consumers to shop for home insurance and obtain insurance
quotes. DIFS asked insurance companies participating in the discount survey to provide us with their
website address and phone number. The following list of company website addresses or phone numbers
are being provided as an additional shopping tool.
Allstate Indemnity Company
www.allstate.com / 866-621-6900
Allstate Insurance Company
www.allstate.com / 866-621-6900
Allstate Property and Casualty Ins. Co.
www.allstate.com / 866-621-6900
Allstate Vehicle and Proper Ins. Co.
www.allstate.com / 866-621-6900
American Bankers Ins. Co. of Florida
877-584-1364
American Family Home Ins. Co.
www.AMIG.com
American Modern Select
www.AMIG.com
American Security Ins. Co.
877-893-5739
Armed Forces Insurance Exchange
www.afi.org
Auto Club Group Ins. Co.
www.michigan.aaa.com/insurance
Auto-Owners
www.auto-owners.com
Automobile Ins. Co. of Hartford, CT.
www.travelers.com
Bankers Standard Ins. Co.
800-444-6161
Central Mutual Insurance Co.
www.central-insurance.com
Cincinnati Ins. Co.
www.cinfin.com
Citizens Insurance Co. of American
www.hanover.com
Depositors Insurance Co.
800-982-0756
Electric Insurance Co.
800-227-2757
Encompass Indemnity Co.
www.encompassinsurance.com
Encompass Property and Casualty Co.
www.encompassinsurance.com
Farm Bureau General Insurance Co. of MI
www.farmbureauinsurance-mi.com
Farmers Insurance Exchange
www.farmers.com
Fidelity and Deposit Co. of MD
800-660-4539
Fire Insurance Exchange
www.farmers.com
Hastings Mutual Insurance Co.
www.hastingsmutual.com
Homesite Insurance Co.
www.homesite.com / 800-466-3748
Homesite Insurance Co. of the Midwest
www.homesite.com / 800-466-3748
IDS Property Casualty Insurance Co.
www.ameriprise.com/autohome
Kemper Direct (formerly Unitrin Direct)
www.kemperdirect.com
MemberSelect Insurance Co.
www.michigan.aaa.com/insurance
Metropolitan Property and Casualty Ins. Co.
866-482-5546
Michigan Insurance Co.
www.michiganinsurancecompany.com
Mutual Aid Exchange
www.maxinsurance.com
Pharmacists Mutual Insurance Co.
www.phmic.com / 800-247-5930
Praetorian Insurance Co.
800-660-4539
Privilege Underwriters Reciprocal Exchange
www.pureinsurance.com
QBE Insurance Corporation
800-660-4539
State Automobile Mutual Ins. Co.
www.stateauto.com
State Farm Fire and Casualty Co.
www.statefarm.com
Teachers Insurance Co.
www.horacemann.com
Travelers Indemnity Co. of America
www.travelers.com
Trumbull Insurance Co.
800-824-8822
Wolverine Mutual Insurance Co.
www.wolverinemutual.com
Your Guide to Homeowners Insurance – For Michigan Consumers Page 21
Glossary of Common Homeowner Insurance Terms
A
Actual Cash Value (ACV) — The value of your property, based on the current cost to replace it minus
depreciation. Also see “replacement cost.”
Additional Living Expenses (ALE) — The additional living expenses portion of your homeowners insurance
policy pays for extra expenses homeowners incur if they have to live away from home following an
insured risk. Expenses paid may include hotel or apartment bills, restaurant meals, or lost rent if you rent
out part of your house. Coverage for additional expenses is typically 20% of the insurance on your house.
A
djuster — An individual employed by an insurer to evaluate losses and settle policyholder claims. Also
see “public insurance adjuster.”
Agent — A person who sells insurance policies.
All Risk — Coverage against “all risks” means that losses are covered for any reason except for those
specifically excluded in the policy. Those risks excluded could be items such as flood, war, collapse, and
water and sewer backup.
Application — A form you fill out with information about you that an insurance company will use to
decide whether to issue you a policy and how much to charge.
Appraisal — An evaluation of home insurance property by an authorized person to determine property
value or damaged property value.
B
Binder — A temporary insurance contract that provides proof of coverage until you receive a
permanent policy.
Broad Form Insurance — Coverage is provided for the named perils specified in your policy. “Broad”
form policies are also known as “named peril” policies.
C
Cancellation — Termination of an insurance policy by the company or named insured before the
renewal date.
Claim — A policyholder’s request for reimbursement from an insurance company under a home
insurance policy for a loss to property.
Claimant — A person who makes an insurance claim.
Contract — An insurance policy. A policy is considered to be a contract between the insurance
company and the policyholder.
Coverage Amount — The dollar amount that is covered by the insurance company.
Credit-Based Insurance Score — This score is a rating based in whole or in part on a consumer’s credit
information. An insurance score is not the same as a credit score. Using a mathematical formula, a
consumer’s credit characteristics are put through a scoring model that assigns weights to various factors
to determine an “insurance score.” The resulting score is indicative of the likelihood the consumer will file
a claim, not his/her ability to pay the premium. The scoring models are developed by modeling firms
such as Fair Isaac and ChoicePointe or by individual insurers.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 22
D
Declarations Page — Usually the first page of an insurance policy, it contains the full legal name and
address of the insurer, name and address of the insured, the policy number, the period of time a policy
is in force, the amount of the premium, and the amount of coverage.
Deductible — The amount the insured is responsible to pay for a loss before any payment is due from the
insurance company.
Depreciation — Decrease in the value of property over time due to use or wear and tear.
E
Effective Date — The date on which coverage under and insurance policy begins.
Endorsement — A written agreement attached to a policy expanding or limiting the benefits otherwise
payable under the policy. The purpose of the endorsement, also called a “rider,” is to modify the original
agreement to fit the needs of one specific policyholder.
Exclusion — A provision in an insurance policy that denies coverage for certain perils, people, property,
or locations.
Expiration Date — The date on which coverage provided by an insurance policy ends.
F
Force-Placed Insurance — Insurance coverage for only one of the parties having an insurable interest in
that property. For instance, if you still owe money on your mortgage and do not have homeowners
insurance, your lender may take out a single interest insurance policy to protect its own interest in your
property. This type of insurance protects only the lender, not the homeowner and is also known as lender-
placed insurance.
H
Homeowner Policies — Property insurance policies that provide a package of coverage such as
property damage protection, liability insurance, coverage for additional living expenses, etc.
I
Independent Adjuster — A person who charges a fee to an insurance company to adjust a claim on
behalf of the insurer.
Inflation Protection — Automatically adjusts your home insurance policy limits to account for increases in
the costs to repair or rebuild a property.
Insured — The person(s) entitled to covered benefits in the event of a loss.
Insurer — The insurance company.
L
Lapse — The termination of an insurance policy because a renewal premium is not paid.
Liability Coverage — Covers losses for which an insured is legally liable. For homeowners insurance,
liability coverage protects you against financial loss if you are sued and found legally responsible for
someone else’s injury or property damage.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 23
Loss — The dollar amount associated with a claim.
Loss of Use — A provision in homeowners and renters insurance policies that will reimburse policyholders
for the additional costs (housing, food, and other essentials) of having to live elsewhere while the
property is being restored following a loss.
Loss History — Refers to the number of insurance claims previously filed by a policyholder. A company
will consider loss history when underwriting a new policy or considering a renewal of an existing policy.
Companies view loss history as an indication of the likelihood that an insured will file a claim in the future.
M
Market Value — The current value of your home, including the price of land.
Material Misrepresentation — A significant misstatement in an application form. If a company had
access to the correct information at the time of application, the company might not have agreed to
accept the application or would have issued the policy at a different premium.
N
Named Perils — A type of insurance policy that names specific risks or “perils” covered by the policy.
These include fire, theft, smoke, lightning, riot, explosion, wind, falling objects, vandalism, etc.
Non-renewal — A decision by an insurance company not to continue a policy after its expiration date.
O
Optional Coverages – Endorsements to a policy that provide additional protection against losses that
would not otherwise be covered under the policy. The policyholder must pay an additional premium for
this coverage.
P
Peril — A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or
theft.
Personal Property — All tangible possessions (other than land) that are either temporary or movable in
some way, such as furniture, jewelry, electronics, etc.
Policy — The contract issued by the insurance company to the insured.
Policyholder — The person or party who owns an individual insurance policy. This person may be the
insured, the beneficiary, or another person. The policyholder usually is the one who pays the premium
and is the only person who may make changes to a policy.
Policy Period — The time a policy is in force, from the beginning or effective date to the expiration date.
Premium — The amount paid by an insured to an insurance company to obtain or maintain an insurance
policy.
Property Damage — Physical damage to your dwelling and personal belongings.
Property Insurance — Coverage that protects your dwelling and personal belongings in case of fire,
theft, vandalism, etc.
Public Insurance Adjuster — An individual hired by a policyholder to negotiate a claim with the insurance
company in exchange for a percentage of the claim settlement. Public insurance adjusters must be
Your Guide to Homeowners Insurance – For Michigan Consumers Page 24
licensed by DIFS, use an approved DIFS form, and can only charge a maximum of 10% of the claim
proceeds.
R
Rating Territory — The local area within the state where the dwelling is located. It is usually defined by zip
codes.
Refund — An amount of money returned to the policyholder for overpayment of premium or if the
policyholder is due unearned premium.
Reinstatement — The process by which an insurance company puts a policy back in force.
Renewal — Continuation of a policy after its expiration date.
Renters Insurance – Coverage for a person’s personal property against specific perils in a home or
apartment owned by someone else. It also provides personal liability coverage and additional living
expenses. Possessions can be covered for their replacement cost or the actual cash value, which
includes depreciation. Renters policies do not cover the house or apartment building or any detached
structures.
Repair Cost — The cost necessary to replace, repair, or rebuild damaged property to a condition similar
to what it was before the damage, using contemporary materials. For example, plaster walls may be
replaced with drywall.
Replacement Cost — The cost necessary to replace, repair, or rebuild the structure or damaged property
to its original condition with materials of the same kind and quality without deducting for depreciation
but limited by the policy’s maximum dollar amount. For example, a hardwood floor would be repaired
or replaced with the same kind of wood.
Residual Market — Insurers, such as assigned risk plans and the Michigan Basic Property Insurance
Association (MBPIA), which exist to provide coverage for those who cannot get it in the standard market.
Rider — A written agreement attached to the policy expanding or limiting the benefits otherwise
payable under the policy; also called an “endorsement”.
S
Surcharge — An extra fee added to your premium by an insurance company.
U
Underwriter — The person who reviews an application for insurance and decides if the applicant is
acceptable and at what premium rate.
Underwriting — The process an insurance company uses to decide whether to accept or reject an
application for a policy and what rate to charge.
Your Guide to Homeowners Insurance – For Michigan Consumers Page 28
Department of Insurance and Financial Services 08/2019
P.O
. Box 30220
Lansing, MI 48909-7720
Toll-Free 877-999-6442
