State laws may dictate how losses are to be figured, which means the same insurance company may use one method in one state and a different method in another. The common methods are:

Actual Cash Value – The replacement cost of the item minus depreciation. For example, a new television set may cost $500. If your 7-year-old TV set gets damaged in a fire, it might have depreciated 50 percent. Therefore, you would be paid $250 for that set.

Replacement Coverage – The cost of replacing an item without deducting for depreciation. So today’s cost for a TV set with features similar to the 7-year-old one damaged by fire would determine the amount of compensation. If it still costs $500 today, that would be the replacement coverage.

Replacement value should not be confused with market value. The market value is what your house, for example, would actually sell for and is generally more than the replacement cost. This is because replacement value does not include the land, which typically would not need to be replaced.

Check your policy. If you prefer replacement coverage and do not already have it, you may be able to add this coverage. Typically, the difference in premiums is 10 to 15 percent to upgrade from actual cash value coverage to replacement coverage. However, it is well worth it to protect your investment in your possessions. Give us a call to discuss your options.

Remember that policies vary but homeowners insurance usually covers damage to both structures and personal property caused by:

  • Fire or lightning
  • Windstorm or hail
  • Explosions
  • Riot or civil commotion
  • Aircraft
  • Vehicles
  • Smoke
  • Theft or vandalism (sometimes called malicious mischief)
  • Falling objects
  • Weight of ice, snow or sleet
  • Freezing of a plumbing, heating, air conditioning or other such household system

In fact, in most cases your coverage will be even more comprehensive than the above list. Many homeowners policies cover damage on an “open peril” basis, meaning unless a peril (like flood) is specifically excluded, it’s covered. On this type of policy it is very important to understand the exclusions section of the policy.

For most people, their home is their single most valuable possession and largest investment. Homeowners insurance protects your investment as well as you, your family and your household possessions.

If you were to suddenly lose your home due to fire or a tornado, or have the contents damaged or stolen, you probably could not afford to replace everything all at once. If somebody sued you for an injury or damage caused by you or your property, the cost of defending against that lawsuit could be very expensive regardless of the outcome.

All of these situations are covered by the homeowners package policy. And while it may be unpleasant to think about fire, theft, and other uncertainties of life, let’s face it, that’s reality.

Yet another reason you need to carry homeowners insurance is that mortgage lenders require it. No mortgage company will lend the large amounts of money needed to finance homes at today’s prices without requiring an insurance policy to protect that investment.

The Michigan Basic Property Insurance Association is a non-profit non-governmental association formed by the Legislature in 1968 to provide home insurance to Michigan consumers who cannot obtain coverage from private insurers. It will accept most people who pay the premium that it charges; however Chapter 29 of the Michigan Code allows it to refuse certain applicants based on their risk background. A person who is statutorily eligible for coverage with private insurers can also obtain coverage with the Michigan Basic.Its HO-2 rates are an average of the top ten home insurers in Michigan. Its HO-3 rates and commercial property rates are not based on statutory formulas, so it uses a firm that provides actuarial services to help determine the appropriate rates for these coverages. Because it insures a higher percentage of people who would be ineligible or more risky for private insurers, its rates for many consumers may be higher than rates for comparable coverage with a private insurer.

It does not use private insurers as servicing carriers for its business. Its staff utilizes filed eligibility and rating plan rules to underwrite policies. However, it issues policy forms carrying its own name and logo. If you need home, dwelling, or renters insurance and cannot find it from private insurers call the Facility at 313-877-7400 or click here.

You can recover up to $1,000 for vehicle damage not covered by insurance.  You can sue the other driver if you were no more than 50% at fault in an accident.  If you were partially responsible for the accident, however, any court award in your favor would be reduced accordingly.  These lawsuits are handled in Small Claims Courts by the individual motorists involved.

Check with your insurance representative to see if you are protected against these suits. If not, coverage can be purchased.

MCCA stands for Michigan Catastrophic Claims Association.  It’s a special fund set up by state law. Our no-fault insurance system provides unlimited medical benefits for people who are hurt in auto accidents.  So, a single injury can cost millions of dollars.  MCCA reimburses insurance companies for these large losses after they reach a certain threshold, currently at $500,000.  Then companies have to pay an assessment to cover what MCCA paid out for claims.  Finally, this cost is passed on to all policyholders.  In other words, the MCCA charge is your share of the cost for catastrophic injuries resulting from traffic accidents.

Insurance companies also offer optional coverage as part of the no-fault insurance policy.  Collision insurance is available in three forms:

Standard: Pays for damage to your vehicle regardless of who is at fault
for an accident.  YOU always pay the deductible amount.
Broad: Pays for damage to your vehicle regardless of who is at fault
for an accident.  But if you were more than 50% at fault,
YOU pay the deductible amount.
Limited: Pays for damage to your vehicle ONLY if you were not more
than 50% at fault in an accident.  YOU always pay the
deductible amount.

Some other optional coverages are: Comprehensive, which pays for damage to your car resulting from causes other than collision, such as fire and theft;Uninsured Motorist, which pays what you would be legally entitled to collect for injuries caused by an uninsured driver; and Road Service, which pays for aid when your car is disabled.

All drivers in Michigan are required by law to have three mandatory insurance coverages:

  • Personal Injury Protection
    Benefits are paid to the accident victim by his/her own insurance company.  These include the following:

    • All reasonable and necessary medical expenses.
    • Work loss benefits, up to a maximum of $5,189 per month (currently) for three years.  This is subject to annual cost-of-living adjustment.  Higher benefit limits may be purchased.
    • Up to $20 per day, for a maximum of three years for “replacement services.”  This pays for services which the injured person can no longer perform.
    • Survivors’ loss benefits and replacement services benefits are paid to the insured’s dependents in case of death.
    • Funeral and burial expense benefits.

    Personal Injury Protection coverage applies to accidents occurring throughout the United States and Canada.  It covers you and your family while riding in any car and as pedestrians.  Premium costs for this coverage can be reduced by choosing a deductible for medical benefits – and a waiting period or deductible for work loss benefits.

  • Property Protection
    This provides coverage for damage caused by your car to property of others (except moving vehicles), regardless of fault.

    • Coverage is provided up to a $1,000,000 maximum.
    • Vehicles are excluded from coverage, unless properly parked.
    • Property Protection does not apply to accidents occurring outside the state of Michigan.
  • Residual Liability
    This provides protection if you are sued or are legally responsible:

    • In accidents involving death, serious impairment of body function, or permanent, serious disfigurement.
    • When actual economic losses sustained in an accident exceed the benefits available in Personal Injury Protection coverage.
    • In accidents occurring outside of Michigan, for property damage and bodily injury.

    The required limits of this coverage are $20,000 for one person’s injury, $40,000 for all persons injured in one accident and $10,000 for property damage.  Higher limits may be purchased.

Michigan is recognized as having the highest auto insurance medical benefits in the United States.

Michigan’s no-fault law became effective October 1, 1973. It was created by state lawmakers to:
1. Assure that persons injured in auto accidents are compensated …
quickly and equitably … for medical costs and lost income; and
2. Limit lawsuits so that benefits could be paid quickly.

Under a no-fault system, accident victims are promptly compensated for their losses.  In Michigan, those injured in auto accidents receive unlimited medical benefits for their lifetime and substantial wage loss benefits on a “no-fault” basis.  Under Michigan’s no-fault system severely injured people receive immediate benefits instead of the previous system of having to wait for lawsuits with at-fault parties to be settled.

People injured in Michigan auto crashes receive unlimited medical benefits for their lifetime.  No other state comes close to such high benefits.   In most other states, injured parties must filed lawsuits to obtain medical benefits.

Although Michigan has the highest level of benefits in the country, auto insurance average premiums rank 11th in the county.  However, the price of auto insurance in Michigan is driven by the cost of:
1. offering unlimited medical benefits;
2. inflation in the cost of health care and auto repair; and
3. lawsuits.