Your home is not only your safe haven and the place you retire to at night but also one of your biggest assets. Every home is different and has its own distinct and unique features; neighboring homes can be different, let alone homes in neighboring cities and counties. These unique features give the home character but also call for different types of coverage.

Whether it’s a house, condo or apartment you call “home,” here at Envision Insurance (located in Sterling Heights, Michigan) we have a team of highly trained, licensed insurance professionals ready to help with determining what coverage is most appropriate for your home.

Listed below is a brief explanation of Michigan homeowners, condo and renters insurance coverages to help you gain a better understanding of what your Michigan property insurance policy may cover. This list is not comprehensive and determining what coverage is right for your unique situation should be left to the experts, call us today with your questions on which coverage is most appropriate for you and ask us for a free quote!

Homeowners Policy Forms (Types):
HO-2 homeowners policy, also known as named peril policy, covers damages that are listed on a named peril basis, that is, they will only cover damages that result from specific hazards that are outlined in the policy itself.

HO-3 homeowners policy is the standard and most common homeowners policy. It covers damage to your home and other structures on an open-peril basis, meaning that it covers damage from any risk / hazard so long as it is not specifically outlined as an exclusion within the policy itself. HO-3 policies, however, typically offer personal property coverage on a named-peril basis.  

HO-5 homeowners policy, also known as comprehensive form, covers damages to your home, other structures and personal property on an open-peril basis. Hence, the “comprehensive” title, because both the structure and personal property are covered on an open-peril basis, unlike the HO-3 policy form. 

HO-8 homeowners policy are homeowners policies that cover older (often historic) homes that maintain a high value and would be difficult to reconstruct based on the replacement cost valuations provided on a standard HO-3 or HO-5.

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Coverages:

Dwelling coverage in a homeowners policy covers the structure, that is, the home itself in the event of a covered loss. There are three common types of dwelling coverage:

• Actual Cash Value (ACV) bases the dwelling coverage amount on the initial cost to construct the home, less depreciation. ACV can also be based on the actual market value of the home at the time of loss, although this basis is less common.
• Replacement Cost (RC) bases the dwelling coverage amount on the estimated cost to rebuild the home including demolition and excavation, if needed.
• Agreed Value bases the dwelling coverage on an agreed amount, decided upon by the insurance carrier and the homeowner.

Other Structures coverage defines the coverage amount allotted to structures that are not attached to the dwelling (house) such as detached garages, sheds, gazebos, swimming pools, pole barns, fences, etc.  

Liability provides coverage to protect your assets if you are sued for an accident that occurred at your residence involving a not-at-fault party (i.e. guests, distant relatives, etc.). Liability coverage amounts typically range from $100,000 to $2,000,000; if excess coverage is required in order to account for and protect assets valued at a greater amount then what is offered by your insurance carrier’s homeowners policy limits then an umbrella (excess liability) policy should be considered.

Guest Medical extends coverage to cover medical expenses accrued as a direct result of an accident that occurred at your residence that resulted in the injury of your guest(s).  Coverage amounts typically range from $0 – $10,000. It should be noted that guest medical coverage does not extend coverage to immediate family that live at the residence.

Personal Property / Contents coverage provides coverage for the homeowner’s belongings and is typically expressed as a percentage of the total dwelling coverage amount (70% – 120%). For example, if the dwelling coverage is $300,000 and the personal property coverage is 70% then the monetary personal property coverage amount is $210,000.

Additional Living Expenses covers the expenses related to relocation / displacement as a result of a loss. For example, if a house fire displaces the homeowners while the home is being reconstructed, the cost of such relocation expenses are covered so as to maintain a comfortable standard of living.

Optional Coverages:

• Scheduled Personal Property refers to coverage for high-valued personal property that otherwise would not generally be covered on a standard homeowners policy. Some high-valued personal property that should be scheduled are jewelry, gun collections, high-end electronic / audio equipment, etc.

For example, the standard homeowners policy offers only $1,500 in jewelry coverage, so jewelry items like a $10,000 engagement ring would not be covered. Instead, the ring would need to be scheduled (listed) on the policy and the insurance carrier would request an appraisal to be kept on file.

• Loss Assessment provides coverage for homeowners who are members of a homeowners association. Typically, homeowner associations maintain a Master Policy that include property and liability coverage for common grounds. However, should a claim arise, from a loss that occurred on common grounds that exceeds the Master Policy’s coverage limits, the homeowners that make up the association are responsible for indemnification. The excess claim amount would be divided equally amongst all members. Loss assessment provides coverage to cover this excess claim amount on behalf of the homeowner.

• Water Backup / Sump-Pump covers losses as a result of a backflow of water and sewage through the home’s drains as a result of a drain blockage or sump-pump failure.
• Building Code Coverage, also known as building / ordinances coverage, is an endorsement to a standard homeowners policy that provides additional coverage in the event that the original construction specifications of the home no longer meet the current building code requirements. For example, if a home was built in 1970 with 30” door frames and now the city building code / ordinance calls for 36” door frames, this endorsement will cover the additional costs associated with upgrading the door frames and bringing them up to code.
• Inflation Guard is an endorsement to a standard homeowners policy that automatically increases (by 1-2%) the amount of dwelling coverage annually, at the time of renewal, to offset the rate of inflation.

Condominium Policy (HO-6)

Condominium (HO-6) policies provide coverage for condominium owners. HO-6 policies are designed to cover the interior structure, granted condominium owners typically own the property from the “studs in,” that is, they own the interior structure and not the exterior structure of the building.

Similarities between HO-6 policies and the various policy forms for homeowner’s are that both condominium policies and homeowners policies include: dwelling coverage, liability, guest medical, personal property / contents, and additional living expenses. Moreover, both policy forms typically offer additional (optional) coverages, such as: scheduled personal property, loss assessment, water backup / sump-pump and inflation guard. It should be noted that standalone condominiums should be insured on a standard homeowners policy because these condominium owners are responsible for the exterior structure as well as the interior structure.

Renters (HO-4)

Granted renters do not own the property in which they reside, HO-4 policies do not include any dwelling coverage. Instead, HO-4 policies include personal property / contents coverage and liability coverage in a similar fashion as homeowners and condominium policies.