Mich. Homeowners Premiums Below National Average

March 7, 2005

Homeowners insurance in Michigan is apparently a good buy. The $470 average premium for Michigan homeowners insurance is below the national average of $538. According to a study by the National Association of Insurance Commissioners, Michigan's homeowner's insurance premiums ranked 28th compared to all states and the District of Columbia in 2001 (its most recent study).

"Michigan's homeowners insurance premiums are reasonable," said Pete Kuhnmuench, executive director of the Insurance Institute of Michigan. "Competition among insurance companies in Michigan benefits consumers and helps keep Michigan homeowners premiums lower than in other parts of the country."

The HO-3 policy served as the basis for the NAIC study. It is the most common policy, providing the broadest coverage available. The HO-3 provides coverage for the home and other structures located on the premises against many perils, including fire, lightning, windstorm, hail, explosion, riot, smoke, glass breakage, vandalism and theft. Personal property is covered up to selected limits outlined in the policy.

The NAIC study included 2001 average renters insurance premiums by state. It found that Michigan renters also pay less than the U.S. average for coverage. Michigan renters pay an average of $166 for insurance, compared to the national average of $178.

"Some renters don't realize that they need insurance," Kuhnmuench said. "However, for just about 50 cents a day they can have protection for their personal belongings."

The amount a consumer pays for homeowners insurance is affected by many factors, such as the type of construction, age of the home and quality of local fire protection services. By shopping around and taking some simple steps, consumers can take advantage of the competitive marketplace and possibly save some money.

IIM officials suggest that consumers consider the following: Take advantage of discounts offered by your insurance company. Discounts may be offered for installing smoke detectors and dead-bolt locks; insuring both your home and auto with the same company; maintaining good credit and living in a nonsmoking household.

They also suggest raising one's deductible because covering small losses could mean a substantial reduction in the homeowners' insurance premiums. Higher deductibles could produce a savings of 15 to 30 percent.