The Best Homeowners Insurance in Michigan of 2023

Photo: istockphoto.com

A homeowner rarely plans for disaster to strike, but if it happens to, the added protection a solid homeowners insurance policy provides can be a financial lifesaver. The right policy not only provides peace of mind, but it also offers financial assistance for damage repair costs, the replacement of personal belongings, and coverage for high-value items if needed.

Finding the best homeowners insurance in Michigan means identifying the company that best fits a homeowner’s exact needs. Considerations such as coverage options, claims process, budget, and availability of digital tools are a handful of factors for homeowners to consider. Shopping around and comparing multiple homeowners insurance companies is one of the most effective ways to find the right fit and coverage as a resident and property owner in Michigan.

1. BEST OVERALL: State Farm
2. RUNNER-UP: Allstate
3. BEST CLAIMS PROCESS: Lemonade
4. BEST FOR SERVICE MEMBERS: USAA
5. ALSO CONSIDER: Auto-Owners Insurance

Photo: istockphoto.com

What to Consider When Choosing One of the Best Homeowners Insurance Companies in Michigan

No matter where a home is located in Michigan, from Detroit to Grand Rapids and everywhere in between, Michigan homeowners will want to bear in mind not all property insurance companies operate the same way and each policy will be tailored to fit the homeowner’s unique needs. After selecting a list of potential insurance providers providing coverage in Michigan, prospective policyholders will want to evaluate what each policy offers, including coverage amounts, policy add-ons, costs, the quote and claims processes, and deductibles.

Coverage Amount

The coverage amount is a vital part of the homeowners insurance policy because it details how much coverage is provided should the worst-case scenario happen to the property. Dwelling coverage is a major component of the overall amount and refers to the coverage of a home’s structure. Dwelling coverage is not only required by most lenders when a homeowner is securing a mortgage, but it provides coverage to repair or rebuild the home at full replacement value, or replacement cost, which is how much it costs to build in today’s market. It’s important for homeowners to understand how much coverage is needed and to make sure their policy is calculated based on the specific features of their home (including square footage and roof type) so that in the event of a total loss, their homeowners insurance would provide adequate coverage to rebuild if needed.

Coverage amount also includes coverage for personal belongings that are lost, damaged, or destroyed as a result of covered perils. However, this coverage is typically included at actual cash value—which accounts for depreciation and doesn’t pay to replace the lost or damaged items at today’s prices—so a homeowner may choose to add replacement cost coverage for an additional cost to get items replaced at today’s prices. Shopping for the right home insurance policy involves careful consideration of the exact coverage amounts and types of coverage needed.

Policy Options

A standard homeowners insurance policy covers damage from a list of covered perils or events, such as fire, wind, hail, and theft. A standard policy also includes liability coverage, which can protect a homeowner and their family members if they are held legally responsible for damages or injuries to a third party. A homeowners insurance policy also provides medical payments to others coverage, which pays for medical bills up to a certain limit if someone is hurt while on the homeowner’s property regardless of fault. Homeowners in Michigan may want to consider adding on to their policy if they need higher liability limits, coverage for high-value items, or coverage for situations not typically covered by a standard homeowners insurance policy. An example is flood insurance, a coverage that is usually excluded from even the best-rated homeowners insurance policies. However, homeowners can usually purchase the best flood insurance either as a policy add-on or as a separate policy. Some homeowners may prefer identity theft coverage or water backup coverage, which are typical examples of policy add-ons.

Insurance Premiums

Insurance premiums are the amount of money the homeowner must pay in return for coverage. This amount varies based on multiple factors, including the coverage amount, policy add-ons, amount of deductibles, and any discounts the policyholder may qualify for. Each insurance provider has its own process for calculating rates, which is why it’s critical for homeowners to compare several companies if possible. Keep in mind the best homeowners insurance rates may not be the least expensive, but the policy may provide the most value to the homeowner for the money.

Insurance premiums are paid in a couple of different ways. If there is a mortgage on the home, most lenders require an escrow account to be set up and the annual premiums paid out of the account. The homeowner is responsible for funding this account up front during the closing process of the loan. The homeowner will continue to make monthly payments to the mortgage company to cover insurance premiums and property taxes, and the lender will “hold” the funds in an escrow account and pay the insurance company yearly.

If there is no mortgage or the lender doesn’t require an escrow account, the homeowner will pay the insurance company directly and choose the payment cadence that works best for them, such as monthly, quarterly, or annually. The exact payment options available depend on the provider, which may be a useful question for a homeowner to ask during the selection process.

Quote Process

The quote process is another aspect worth noting when a homeowner is choosing the ideal insurance company to work with. This initial stage provides an opportunity to see the coverage options available from the provider and determine if it meets the homeowner’s needs. Not only can coverages be reviewed, but so can discounts, rates, and customer service options, which are all worth considering during the process.

Most companies offer online quotes or a customer service number to call for more detailed information. However, some companies may only provide the option for homeowners to work through a local insurance agent.

Claims Process

Filing a claim is a large part of the experience with an insurance company, yet it’s often hard for a homeowner to get a true picture of how it works until it actually occurs. Most insurance companies offer more than one way to submit a claim, such as filing online, through an app, or with a local agent. It’s important for homeowners to consider what their preferred method of communication would be during the claims process and make sure the insurance provider is capable of providing it.

Deductibles

A deductible is the out-of-pocket amount the homeowner is responsible for when filing a claim. Like insurance rates, deductible options vary from one provider to another, and the amount selected impacts the overall cost of the premiums. Homeowners who are willing to take on a higher deductible and therefore pay more out of pocket when filing a claim will have lower premiums. Conversely, if a homeowner elects to have a low deductible, they are likely to have higher insurance premiums. A homeowner can also choose to have different deductibles for different coverage types, which is another example of tailoring a policy for unique needs.

Additional Policies

Add-on policies offer an opportunity to customize a policy further. These policies extend coverage where the homeowner’s standard policy may fall short. For instance, a homeowner may opt for endorsements or add-ons, such as coverage for damage caused by sinkholes or earthquakes, and these options are worth reviewing when going through the selection process.

Discounts

Discounts are a fantastic way to lower the overall cost of insurance premiums. The exact discounts offered vary from one provider to another, but they are often significant enough to make a real impact on the policy cost for homeowners in Michigan. Discounts can be given for a variety of reasons, from having more than one policy with the provider (such as auto or life insurance), to enrolling in automatic payments and paperless statements, to installing safety devices such as smoke detectors and security systems. There may even be discounts specific to residents of Michigan, which a local agent or customer service representative can help identify.

AM Best Rating

A company’s AM Best insurance rating is an important factor to take into account because it’s an unbiased, third-party method for checking an insurance company’s financial standing and ability to pay out claims as needed for homeowners. Reviewing a company’s AM Best rating is a quick way to assess its overall financial health. AM Best reviews are specific to the insurance industry, and companies are assigned a rating based on their credit and finances. The highest rating is an A++ (Superior) and goes down to a D (Poor) rating. These scores represent the confidence level AM Best has with the finances and claims payout history of an insurance company. When shopping for a policy, a homeowner may want to look for companies that have a strong AM Best rating; though it’s important that they note that not all companies are rated by AM Best, especially if they are relatively new to the industry, and a lack of AM Best rating isn’t necessarily a reflection on the company’s ability to pay out claims.

Our Top Picks

To find the best homeowners insurance in Michigan, we looked for providers with a range of coverage options, variety of discounts, strong AM Best ratings if available, overall customer experience, and other critical factors that may be important to homeowners.

Photo: statefarm.com

Why It Made the Cut: State Farm offers Michigan residents competitive rates, robust coverage options, multiple discount opportunities, and the strongest AM Best ratings available.

State Farm has standout features with its homeowners policies, including available extended dwelling coverage and available high coverage limits for personal property. These two features are considered generous compared to standard policies with other insurers. State Farm adds extra dwelling coverage equivalent to 120 percent of the home’s replacement value at no additional cost. This means a policyholder has access to an increased coverage limit that could help them cover the full cost to replace their home if needed, even if the total cost is higher than the property’s estimated replacement cost due to increases in building costs and other expenses. Coverage for other structures ( such as fences, sheds, gazebos, and detached garages) is usually limited to 10 percent of the insured value of the home.

Additionally, homeowners insurance policies with State Farm include personal property coverage of up to 150 percent of the dwelling coverage limit, which is another unique feature. The extended personal property coverage might appeal to homeowners who have a significant amount of possessions they want covered, and this coverage assures many homeowners that much of their property will be covered in the event of a total loss. Homeowners will want to be aware, however, that there are limitations to what types of personal property are covered by a standard homeowners insurance policy, and certain items, such as jewelry, collectibles, sports equipment, and musical instruments, have policy limits and will need to be covered by a separate policy.

State Farm also offers relatively low-cost homeowners insurance rates for Michigan properties while offering up to a 35 percent discount for customers who bundle their home and auto insurance. No matter what a homeowner’s communication preference is—via online, an app, a customer service rep, or a local agent—a policyholder can choose the style that best fits their needs.

Specs

• Quote process: Online, phone, agent
• Claims process: App, online, phone, agent
• Deductibles: 0.5 percent, 1 percent to 5 percent; $1,000 to $5,000 or $10,000
• Discounts: Multipolicy, protective device, impact-resistant roofing
• AM Best rating: A++

Pros

• High 120 percent extended dwelling coverage included
• High personal property coverage of up to 150 percent of dwelling coverage limit
• Relatively low insurance premiums
• Generous 35 percent discount on home and auto bundles available

Cons

• Limited other structures coverage

Photo: allstate.com

Why It Made the Cut: Allstate offers a variety of endorsements, such as water backup coverage, so homeowners can customize a policy exactly the way they need it.

Allstate is another top consideration because of the high water backup coverage limits available, which may be a deciding factor for Michigan homeowners. The water backup coverage offers up to $50,000 reimbursement toward restorative costs for damage in the home due to water backups. While Allstate offers numerous standard and extra policy options, which can increase the overall cost of the premiums, it also offers a range of discounts for deeper savings, including claim-free rewards and loyalty incentives.

Those who need flexibility with deductible amounts or want to customize the amount of the deductible based on coverage may appreciate Allstate’s offerings. Plus, Allstate offers additional help with an online tool a homeowner can use to identify common claims specific to their ZIP code, which may be helpful when customizing a policy.

Specs

• Quote process: Online, phone, agent
• Claims process: App, online, phone, agent
• Deductibles: $1,000 to $5,000; 1 percent or 2 percent; windstorm/hail: $1,000 to $5,000; 1 percent or 2 percent
• Discounts: Multipolicy, protective device, responsible payment, claim-free, loyalty, new customer, home buyer, automatic payments, early signing, smoke-free
• AM Best rating: A+

Pros

• High $50,000 water backup coverage available
• Wide range of discount opportunities
• Claim-free rewards available
• Insightful online tool identifies common and expensive claims for each ZIP code

Cons

• Relatively high insurance premiums

Photo: lemonade.com

Why It Made the Cut: The claims process can be a stressful event for a homeowner, but Lemonade works to streamline the required claims steps as much as possible, even offering instant payout in some cases and working exclusively through the app.

Lemonade is a relatively young company when compared to more established homeowners insurance agencies, offering a modern take on both the quote and claims process. Lemonade uses an AI-based claims process, which speeds up the processing times for simple claims. Additionally, Lemonade offers added flexibility when choosing a deductible, with deductibles starting as low as $500, which is lower than the typical deductible amount many companies offer. Policyholders will want to note that Lemonade doesn’t offer a flood insurance endorsement, but Michigan homeowners can usually purchase a separate policy through the National Flood Insurance Program (NFIP).

Another uncommon feature that’s standard with Lemonade is the giveback program the company created. Lemonade takes all unused money from its policies each year and donates a portion to nonprofits; policyholders can choose among a list of nonprofits when they sign up for their policy. Overall, the company has donated millions because of this program. While Lemonade is not currently rated by AM Best either, it does hold an “A” rating from Demotech, which assesses the financial stability of regional and specialty insurers.

Specs

• Quote process: Online
• Claims process: App
• Deductibles: $500 to $10,000
• Discounts: Multipolicy, protective device
• AM Best rating: No rating

Pros

• Instant claim approval possible
• Low $500 deductible option
• Leftover money from customers’ premiums is donated to a nonprofit of the policyholder’s choice

Cons

• No flood coverage available
• Not currently rated by AM Best

Photo: usaa.com

Why it Made the Cut: Service members have their own policy needs that may not apply to other homeowners, and USAA designs its policies with this in mind, such as offering full replacement coverage with every homeowners insurance policy.

USAA has added numerous benefits to its standard homeowners policy for service members. For example, USAA offers an exclusive contractor network, where each contractor is vetted and must meet strict criteria. This saves a policyholder time and effort selecting qualified contractors to perform any home repairs or rebuilding. Although USAA does not disclose its deductible options up front, homeowners who are on active duty will not owe a deductible if they need to file a claim on their military equipment or uniforms, reducing a policyholder’s out-of-pocket costs.

USAA membership is limited to active and retired service members and their families, but eligible customers in Michigan will find homeowners insurance policies through USAA come with replacement cost coverage as the standard, not to mention a variety of available discounts. Members also have access to numerous communication options, including an app, online, or with customer service representatives, which can make it easier for members, especially those on active duty, to manage their insurance needs.

Specs

• Quote process: Online (for USAA members), phone
• Claims process: App, online, phone
• Deductibles: Unknown
• Discounts: Multipolicy, protective device, connected home, loyalty, claims-free
• AM Best rating: A++

Pros

• Standard replacement cost coverage
• Exclusive contractor network
• No deductible on lost or damaged military equipment for active-duty members

Cons

• USAA membership limited to service members and their families
• Unknown deductible options

Photo: auto-owners.com

Why It Made the Cut: Auto-Owners is based in Lansing, Michigan, and offers a variety of coverage options, including an inland flood coverage endorsement, plus an equally substantial number of discounts.

Auto-Owners Insurance offers a comprehensive list of policy coverage options for homeowners in Michigan, including a separate inland flood coverage endorsement. This means a homeowner does not have to purchase a separate flood policy from another provider and can simply add it to their homeowners insurance policy. Additionally, the homeowner can save through the wide range of discount options, such as multipolicy, paid-in-full, paperless billing, and protective devices.

Although Auto-Owners does not publish its deductible information online, it does offer an extensive network of local agents, which means a homeowner can work with a professional to customize their policy. The local agents are the preferred method for handling policy quotes and claims too, since there is currently no online or over-the-phone quote or claims option.

Specs

• Quote process: Agent
• Claims process: Agent
• Deductibles: Unknown
• Discounts: Multipolicy, payment history, paid-in-full, paperless billing, advance quote, protective devices, water shut-off system, automatic backup generator, mortgage-free, favorable loss history
• AM Best rating: A++

Pros

• Inland flood coverage available
• Wide range of discount opportunities

Cons

• No convenient online or over-the-phone quote or claims options
• Unknown deductible options

Our Verdict

State Farm is our pick for Best Overall, and Allstate gets our nod as the Runner-Up for best homeowners insurance in Michigan. State Farm offers standard 120 percent extended dwelling coverage on Michigan properties, which is a standout compared to other companies’ offerings, and State Farm’s rates are highly competitive (including numerous discounts) compared to others’ rates. Allstate offers water backup coverage up to $50,000, which is also a standout feature, and also provides numerous other policy options and multiple discount opportunities.

How We Chose the Best Homeowners Insurance Companies in Michigan

Multiple homeowners insurance providers were evaluated to determine the top providers worth considering. When we were specifically looking at the best homeowners insurance companies in Michigan, it was important to find providers offering a variety of options for policy customization, since the needs of each homeowner are unique, such as a homeowner who lives in a flood-prone area and needs add-on flood insurance or a homeowner who has a large collection of sports equipment and wants to make sure it’s adequately covered. Cost is a major consideration too, which means the available discounts, the deductible options, and the premium rates were all factored into the decision.

Lastly, AM Best ratings were examined and used as part of the selection process when applicable. These homeowners insurance ratings are a valuable tool to quickly assess a provider’s overall financial health and give a homeowner greater insight into a company’s ability to pay claims.

Before You Choose One of the Best Homeowners Insurance Companies in Michigan

Shopping around and comparing providers is one of the most effective means for selecting the right company and policy. Comparing companies and quotes not only provides greater insights to the homeowner about what’s available, but it can also mean saving money. However, it’s also important for a homeowner to look beyond the cost of the premiums as the deciding factor for a policy and company. Homeowners will want to consider what it will be like to work with the provider. They’ll also want to consider the value their policy provides and what the claims process looks like, especially when they’re in a stressful situation involving damage to their home or personal property.

Cost of Opting for One of the Best Homeowners Insurance Companies in Michigan

One of the most common questions surrounding homeowners insurance policies is how much the premiums will cost. Not only does the type of policy and coverage option impact how much a homeowner pays, but each provider has its own set of rates. Location has a major impact on the homeowners insurance cost, and Michigan is no different. The cost can vary from one ZIP code to another within the state, too. There may be areas more prone to flooding, severe weather, or crime, all of which can also influence the cost. In other words, with so many variables, it would be very difficult for a homeowner to pinpoint an exact rate until they are able to obtain a proper quote with information specific to their property and location.

The Advantages of Opting for One of the Best Homeowners Insurance Companies in Michigan

The right homeowners insurance policy can provide enormous financial protection if there is loss or damage due to a covered event. A policy may even provide benefits most homeowners are not aware of, such as damage from wild animals or coverage for valuables that are currently off-property. While exact coverage depends on the policy chosen, the best home insurance companies in Michigan offer a wide range of advantages for residents, including:

• The ability to customize a homeowners insurance policy to the specialized needs of individual policyholders, such as adding flood insurance or endorsements for identity theft and high-value items;
• The best auto and home insurance discounts, among other money-saving measures, which can significantly lower the amount of premiums or offer the homeowner more robust coverage while staying within budget;
• Convenient customer service and communication options, such as online, through an app, through an agent, or through customer service representatives.

FAQs

Michigan homeowners may be faced with numerous questions as they settle on the right homeowners insurance policy for their property. Knowing the answers to common questions surrounding the best homeowners insurance in Michigan can further help with the selection process when homeowners are choosing the insurance company and level of policy coverage they need.

Q. How do I get homeowners insurance in Michigan?

The process to obtain homeowners insurance in Michigan involves a few steps. The ideal place for a homeowner to start is to work with the best homeowners insurance companies for homeowners insurance quotes, so it’s easier to compare policy options and the customer service experience side by side. Once the homeowner has decided on an insurance company, they’ll need to submit an application. Many companies offer an online application process, but in some cases, working through local homeowners insurance companies is preferable, especially if a homeowner has very specific coverage needs. From there, selecting the policy coverage options and submitting the required paperwork (such as a driver’s license and property information) are the final steps in the process, whether purchasing through an agent or purchasing homeowners insurance online.

Q. How much homeowners insurance do I need?

To determine how much coverage they need, homeowners will want to calculate the square footage of their home and take into account any upgrades to their home that would increase the value, then multiply it by the local cost to build per square foot. This allows them to obtain a general estimate of how much it would cost to rebuild the home. It’s also important for the homeowner to estimate the replacement cost of their home’s contents, including valuables, furniture, clothing, and housewares, to determine proper coverage amounts when shopping for homeowners insurance.

Q. What does homeowners insurance cover?

The coverage offered by housing insurance actually depends on the type of policy purchased. One of the most common types of homeowners insurance is an HO-3 policy, which includes coverage for the dwelling, personal belongings, and liability. With an HO-3 policy, the home is protected against certain perils and would be repaired or rebuilt at replacement cost. Coverage for lost or damaged personal property is limited to named perils, and damaged items are repaired or replaced at actual cash value (i.e., the depreciated value of the items), unless the homeowner adds replacement cost coverage for personal belongings to their policy.

Q. Is homeowners insurance required in Michigan?

Unlike auto insurance, homeowners insurance is not a legal requirement in Michigan. However, most lenders require the borrower to secure a homeowners insurance policy as a condition for obtaining a mortgage, since it provides additional financial protection for both the lender’s and the homeowner’s investment.

Q. Do I pay homeowners insurance monthly or yearly?

Most lenders require homeowners insurance policy premiums to be paid through an escrow account. The escrow account is initially funded by the homeowner during the closing process. The homeowner continues to make monthly payments to the lender that cover both homeowners insurance and property taxes. The lender holds the amount each month and then makes the payment on behalf of the homeowner when the next annual insurance premium payment is due. However, if there is no escrow account, a homeowner typically has the choice to pay monthly, quarterly, or annually, depending on the insurance company.

Q. What is the average cost of homeowners insurance in Michigan?

The average cost of homeowners insurance in Michigan is $1,527 annually for $250,000 in dwelling coverage. Further homeowners insurance reviews indicate this is slightly above the national average of around $1,428 per year for $250,000 in dwelling coverage.

Sources: Bankrate