What is Homeowners Insurance in Michigan (Basic Explanation)

How's it going? Thanks for tuning in. If you are watching this video, you are probably somebody that is either looking to purchase a home or you already own a home and you are just reviewing your insurance options and actually curious what homeowner's insurance actually covers. I had a friend the other day that was buying a house and I sent him a quote and he was just curious, what does this actually cover me for? What am I actually getting for this premium that I'm paying every month or every year? So I figured I would make this video not only to help him, but to help everyone else kind of understand what your homeowner's policy actually covers and the basic structure of it as well. My name is Brian. I'm an independent insurance agent based here in the state of Michigan, Metro Detroit specifically. I work with businesses on their commercial insurance program. So liability, worker's comp, commercial auto, property insurance. And then also I help families and individuals with their personal insurance, their home, their auto insurance as well. So today I wanted to get into what actually is covered on a homeowner's insurance policy. So number one is going to be fire. So if your home has a fire, it's gonna cover the rebuilding costs, the remediation costs for the damage from that. There's also other coverages involved as well that I'll get into deeper into this video, but think that your homeowner's policy will cover fire damage. Next would be wind and hail, storm coverage, lightning damage. So I know here in Michigan, there aren't a ton of tornadoes, but if there was ever a tornado, this is where your homeowner's insurance would step in to help cover the damage from that. Next would be water. And this is where things kind of get confusing because there are a lot of exclusions around water, but you would have coverage if a pipe burst in your home. Frozen pipe, that's very common here in Michigan. But there are exclusions around things like flood. You would need to purchase a complete separate policy for flood coverage. And then there's also water backup coverage. So any water that's coming from within the home, so sump pumps, drains, showers, sinks, anything like that, you would have to add on a water backup, a sewer backup endorsement coverage to that. But there is coverage for certain water damage on your policy. And then there would be theft and vandalism. So if your items, if somebody comes in your house, steals things, you would have coverage for that. And then also vandalism if your home was ever vandalized. Next would be things like falling objects. So if a tree ever fell on your home and damaged it, you would have coverage for that. And then last would be liability. So if somebody ever gets hurt on your property and they sue you, this is where your liability coverage on your homeowners insurance policy would come into play. Now I do want to walk through some of the main, how the policy is actually structured. So first is gonna be your dwelling coverage AML. This is gonna be based on the replacement cost value of your home. And you really want this as close to accurate as possible. The insurance companies have their own systems on how this amount is calculated. It's gonna be based on things like the year built, the square footage of the home, how many full bathrooms and how many half bathrooms you have, if you have a finished basement or not. These are all factors that the insurance company takes in and then comes up with that replacement cost number. This is what it would take to completely rebuild your home from the ground up. It is not the same as market value, not what you could sell your home for. It is what it would take to, again, rebuild your home from the ground up. So very important to make sure that that amount is accurate. Next would be your coverage B. This is your other structures coverage. This is automatically set at 10% of this coverage AML. So if you have a $500,000 home, then your coverage B, other structures coverage, is going to be set at 50,000. You cannot adjust this number lower, but you can adjust it higher. So this would be for any detached garages, pole barns, any structures not permanently attached to your main home. Next would be your personal property contents coverage, your coverage C. And this is automatically set at 50 to 70%, 75% sometimes, depending on the insurance company. The easiest way to think about personal property would be if you were to flip your home upside down, shake it, what would fall out? So this would include things like furniture, appliances, clothes, dishes. Anything like that is gonna be covered under this personal property contents coverage. And again, that is automatically set at a percentage of your coverage AML, similar to other structures. Next is gonna be coverage D, loss of use, additional expenses coverage. This would be if you ever cannot live in your home due to a claim. Let's say you have a fire and you can't live in your home for a certain period of time after that claim while your home's being restored. This is where this coverage would come in. It would help cover the cost to rent another home or to live in a hotel, whatever it may be, and then certain other additional expenses that might be associated with the claim and having to relocate and things like that. And again, this is typically set at either 20 or 30% of that coverage AML. And then next, I mentioned briefly earlier, is your coverage E, your liability coverage. Very important part of the policy because again, if somebody ever does get hurt on your property and they sue you, this is where this coverage would come into play and help with the medical expenses, the court fees, the lawsuit, everything of that nature. For this amount of coverage, I always recommend going with a million dollars. Some companies only maybe go up to $500,000 but always max this coverage out. It really, it isn't that much more expensive to have a million dollars in coverage versus 500,000 or 300,000. So this is not the area to cut costs on a policy. I will always recommend to have a million dollar limit for this coverage. Now, those are the main parts of the policy as far as how it's structured. Next would be the deductible. So every policy is gonna come with a deductible. That is what the initial amount that you are gonna be responsible for out of pocket in the event of a claim. Typically, it's gonna come in amounts like $1,000, 2,500, 5,000. And then very common, when I'm making this video in 2026, it's becoming much more common to see wind hail deductibles also on the policy. And this might be seen as a percentage amount. So it's very common now to see a 1% wind hail deductible on a policy. So let's say you have a $500,000 house for your coverage A, you might have a $2,500 contents and building deductible, and then a 1% wind hail deductible. So your wind hail deductible would be $5,000. So more common wind hail claims would be certain roof damage, if there's a storm, siding damage, things like that. And that's where that 1% deductible would apply versus your $2,500 deductible. So just something to note there, that's becoming a lot more common in today's world. Next, some certain endorsements that I always will recommend folks look into, some of the more common ones, at least. Water backup, I mentioned that earlier. This is one of the more common types of claims. So it will be, depending on the area that you're in, this can be a more expensive endorsement to add on, but I will always recommend having at least some form of coverage, especially if you have a basement and there are potential issues with a sump pump or just water backup in general. Again, always worth looking into, at least having it priced out to see if it's worth having on. Next, probably one of the more important endorsements, especially for the cost, is going to be a guaranteed replacement cost endorsement or increased cost endorsement. So this would add coverage onto your policy. If there ever was a large claim, a total loss, this would add coverage to your coverage dwelling A amount. So if the $500,000 home burns to the ground and it costs $700,000 for rebuild, if you have this guaranteed replacement cost endorsement, because there's an increased cost of construction, whatever it may be, you get that full $700,000 amount. And then certain companies don't always offer that guaranteed replacement cost endorsement, but just about everyone will offer an increased cost endorsement option, so maybe 150%, 125%. Always take advantage of it because it's typically not that expensive to have included on the policy, but again, always worth it if you are ever in one of those worst case scenarios and there ever is a total loss and there's an increased cost of construction. So always worth including. Next would be ordinance or law coverage. Very important for older homes. This would help with any, if there ever was a claim and there's a cost to rebuild certain parts of the home to get it up to code. This is gonna come in a percentage amount. Some companies automatically include a little bit of coverage, but those are gonna come in percentage increments of 10%, 20%, 50% or 100% of your coverage while in AML. And then there's service line coverage. This can be, I always recommend having some form of coverage in this area, 10, $20,000 are most common. This would help cover any damage to utility lines going into the home. Very important coverage. Not super important, I should say, but definitely something to consider depending on the area you're in and things like that. And then the last one I wanna mention, equipment breakdown. So this would help with any sort of appliances that might get damaged, that might have mechanical failure, not wear and tear, never think wear and tear, but if there was maybe a power surge that then damaged one of your appliances, it broke down, this is a great endorsement to have on and typically not super expensive. So overall, those are the endorsements optional coverages. A lot of times insurance companies will have certain package options that have set amounts that you can add altogether for those coverages, but just some ones to consider. Hopefully this video was helpful in kind of giving you the rundown of what actually is covered on a homeowner's policy and some items to look for. If you have any specific questions on homeowner's insurance or insurance in general, home, auto, or even business insurance, feel free to reach out directly. All my contact info should be in the description below. I really appreciate you watching the video. And if you watch this far and you wanna support the channel, feel free to subscribe, like, share with anyone else as well. And again, feel free to reach out and I look forward to seeing if we can help. Thanks a lot.