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Residents of southeast Michigan had a wakeup call with an unseasonably early outbreak of tornados on March 15, 2012. Three were reported; the most serious in Dexter, Michigan, within 30 short miles of our office.

Michigan homeowner insurance policies provide coverage for damage resulting from wind and tornados, so separate insurance does not need to be purchased as they do for flood and earthquake. 

According to USA Today, “…studies have shown that, while 96% of people have homeowners insurance, 64% of U.S. homes are undervalued for insurance purposes, said a 2008 study from researcher Marshall & Swift. That leaves homeowners with enough money to rebuild 81% of homes, the study said”. 

“Home values have tanked 33% nationwide in the past five years. That may have led people to think they didn’t need to upgrade their insurance. But building costs, in most areas, have likely gone up, insurance experts say.”

Home values have dropped significantly in recent years.  All too often, we find that people tend to associate the amount of insurance on their home with the market value.  Insuring a home for less than its replacement cost can be a very expensive mistake in two ways.  First, a standard homeowner policy will not pay more than the coverage amount shown on the declarations page.  If you have underinsured, you will have to reach into your own pocket to make up the difference; perhaps tens of thousands of dollars.  Second, most homeowner policies contain a penalty; a not-well-known provision that says the policy will value the loss at “actual cash value” if the amount of insurance is less than 80% of the home’s full replacement value at the time of loss.  Actual cash value is the cost to replace or repair the damage, less depreciation and other possible factors.  When disaster strikes, the last thing you want to hear is that you did not have enough insurance.

Take time to review your insurance before catastrophe strikes.  Make sure the amount of insurance showing on the declarations page of your homeowner policy is adequate to “replace” your home.  Evaluate your home’s contents as the amount automatically included in the policy may not be enough for you.

Call INSURANCE PLANNING SERVICE today at 800-220-5582 or contact us. via our online contact form for a no-obligation review of your Michigan homeowner insurance policy.

Richard D. Bernard, AAI, CIC

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Lighthouse Group Main Office in Grand Rapids, MI
Mailing Address | P.O. Box 530009, Livonia, MI 48153

Phone: 734.421.9900 | Toll Free: 800.220.5582 | Fax: 734.421.9911

Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake