While the state of Michigan offers great opportunities for landlords, one cannot overlook the risks associated with owning a real estate investment. Therefore, a comprehensive landlord policy is needed to protect one's investment against common risks.
If you are venturing into the real estate world of Michigan, you are probably wondering where to begin with your insurance needs. This article will help you understand the expected risks, the available coverages against these events, and how you can get the best landlord insurance coverage in the state.
What Landlords Should Know About Insurance in Michigan
Landlords across the country face all sorts of risks. Some are usually specific or common to some regions, posing the risk of more damage to landlords.
As a landlord, it is important to understand what risks you face based on your location. This will help you get a policy that offers the coverage you need for your rental property. It also makes it easier to find an insurance broker who can provide you with the best insurance in Michigan.
Common Property Perils in Michigan
Property crime rate
Michigan's property crime rate is estimated to be about 13.46 per every 1,000 residents. This includes 2.31 and 9.33 burglary and theft rates per 1,000 compared to 3.12 and 13.90 in the whole country. According to the same statistics, the chances of being involved in property crime in the state are 1 in 74.
Still, the potential for property crime risk will vary in different towns and cities across Michigan. For example, cities such as Detroit, Flint, Jackson, and Muskegon Heights have been listed as the most dangerous cities in the state. However, there are other statistically safer areas in Michigan, such as Northville, Berkley, Haslett, Huntington Woods, and Troy.
Natural disasters
Michigan is prone to natural disasters like floods, wildfires, winter storms, tornadoes, and severe storms. For instance, flooding is usually expected in several cities in Michigan. While the latest 2021 flood in parts of Michigan caused considerable damage, it does not compare to the historic flood of 2014 that caused damages in the millions.
These events might not happen in your location. However, risk management involves anticipating damage from unexpected incidents and preparing for the outcome.
Liability risks
Did you know tenants can sue a landlord for injuries incurred while on the property? The same applies to any guest of a tenant or service person injured while on the property. Liability coverage in a landlord insurance policy can cover legal fees, medical bills, lost earnings, and other applicable compensations if a tenant or a third party gets injured on your property.
What Types of Landlord Insurance Are Available in Michigan?
It's important to understand all the possible risks you could face in Michigan when shopping around for insurance for your rental property. The most comprehensive landlord insurance policies offered in the state will offer four main areas of coverage:
1. Property coverage
For the building, its primary structure, and additional structures like fences and garages. This policy provides coverage against basic events such as fire, hailstorms, windstorms, and vehicles. In addition to the building, insurance companies can cover the landlord's personal content used to service the property, (e.g. furniture, equipment, and appliances).
2. Liability coverage
Remember the risk of landlord regulations in Michigan? These risks of any physical injury or property damage a third party faces on your property could lead to lawsuits. The liability coverage protects you in such cases, catering to any legal and medical costs accrued in such lawsuits. The limits of this coverage will vary between insurance companies, but you can choose a limit that suits your budget.
3. Loss of use coverage
If your property becomes uninhabitable due to damage from any of the covered risks, the insurance companies in the state reimburse your rental income for the period the house remains vacant. For example, if a fire damages your rental property and it becomes uninhabitable, your landlord insurance policy's loss of use coverage would reimburse you for the loss of rental income while repairs are being made.
4. Additional coverage
Unfortunately, some situations are never covered in a basic landlord insurance policy, even the most comprehensive ones. Policies usually exclude damages from flood, earth movement, power failure, neglect, war, and mold.
That's where additional coverage, or a rider, comes in. These, like flood coverage, are added to your primary landlord coverage for extra protection against water damage.
How Much Does Landlord Insurance in Michigan Cost?
Landlord insurance costs in Michigan average about $1,400 annually and can vary significantly based on the below factors:
- Location: A high crime rate and potential for natural disaster occurrences drive landlord insurance costs to the higher end of the price range. This means landlords in different locations in Michigan will pay varying premiums. That's not to say you cannot lower the cost of your landlord insurance if you are in a high-risk city. Measures like installing centrally monitored alarm systems, outdoor lighting and high-quality locks reduce the risk of break-ins and theft, which may lower your insurance premium.
- Property condition: The property's age matters, which is why older buildings generally have higher insurance costs. However, you can renovate older fixtures, like the roof, plumbing, and wiring systems, to help lower your insurance premiums.
- Size: In addition to the property's condition, insurers will consider its overall square footage. The larger the house, the higher your premiums.
- Deductible: The higher the amount you have to pay before the insurer affects a claim, the lower the cost of your landlord insurance coverage.
Where to Find the Best Landlord Insurance Policy in Michigan
There are a few different ways that rental property owners can find and purchase landlord insurance policies in Michigan. They can go through a traditional insurance company, or an online insurance broker.
Each option has its own set of pros and cons. Traditional insurance companies with captive agents may be the first option that comes to mind. However, they may not be able to offer the same level of customization or coverage options as an online broker.
Online insurance brokers like Obie have become increasingly popular in recent years. They offer a convenient way to compare quotes from multiple insurers and find the best coverage for your needs. And because they work with multiple carriers, they can often find discounts you wouldn’t be able to get on your own.
Direct-to-consumer insurance providers are a newer option, but they’re quickly gaining popularity thanks to their simple and straightforward approach to insurance. These companies typically have very few (if any) brick-and-mortar locations, which allows them to pass the savings on to their customers.
So, which option is the best for finding and purchasing landlord insurance in Michigan? It really depends on your needs and preferences. If you want the convenience of an online quote comparison tool and the ability to work with a company exclusively focused on insuring rental properties, then Obie is a great choice.
Obie provides insurance coverage for landlords in all 50 states, and has insured more than $4 billion in property to date. On average, landlords save 25% by switching to Obie.
Getting started with Obie is easy. First, go to their website and enter your property address to receive an instant quote. Then, you can choose the coverage that best suits your needs and budget. Visit Obie's website now to get started.
