Landlord Insurance in Michigan: Costs, Requirements & Best Providers

Michigan’s most common claim is in the basement

Michigan’s benchmark of $2,415 runs about 3% under the national average. A landlord (DP-3) policy on the same $400,000 house would start around $2,780 to $3,020. Michigan sees some hail and the occasional tornado, but water is what fills claim files.

Heavy rain in Detroit in June 2021 overwhelmed the sewer system and flooded thousands of basements, as did the August 2014 storm. Three kinds of water, three different coverages:

Source	What pays
Burst pipe or sudden leak inside	Base landlord policy
Backup through a drain or sewer line	Sewer and water backup endorsement
Surface water, rising rivers, lake flooding	Separate flood policy

Backup endorsements carry their own limits. If your rental has a finished basement or a lower unit, pick a limit that covers drywall, flooring, the furnace and lost rent.

Cold, snow and ice

The January 2019 polar vortex burst pipes across the state. Sudden pipe bursts are covered when heat was maintained; policies can limit coverage on a unit left vacant more than 60 days. West Michigan, from Muskegon to Holland, and the Upper Peninsula get heavy lake-effect snow, which brings ice dams and snow load on roofs.

Floods, dams and the lakes

Flood is excluded from landlord policies. In May 2020, the Edenville and Sanford dams failed near Midland and flooded homes downstream. Lenders require flood coverage in FEMA special flood hazard areas, through the National Flood Insurance Program or a private insurer.

Great Lakes shoreline erosion is a different problem. Earth movement and erosion are excluded, so a bluff losing ground isn’t an insured loss.

Wind and tornadoes

Severe storms bring wind and hail every summer, and tornadoes struck Gaylord in 2022 and Portage in 2024. Wind is covered, often with a separate deductible. Trees on roofs are common claims in older neighborhoods.

Hard-to-insure properties

Older Detroit and Flint housing, long-vacant houses and buildings with outdated wiring can be hard to place. The Michigan Basic Property Insurance Association, the state’s FAIR Plan, is the backstop, with narrower coverage. Steadily and Obie both write vacant and renovation policies if you’re rehabbing between tenants.

What lenders want

Lenders require dwelling coverage at least equal to the loan or rebuild cost, the lender named as mortgagee, and flood coverage in a mapped zone. They rarely require sewer backup coverage, which is why many owners find out too late that they don’t have it.

Ways to bring the premium down

• Install a backwater valve and a battery-backed sump pump, and tell the insurer.
• Add low-temperature and leak sensors in every unit and basement.
• Replace an aging roof before shopping; it helps with both wind and ice dam claims.
• Raise your all-other-perils deductible if you hold a reserve.
• Insure several rentals together through a portfolio policy.

Michigan deposit rules and your risk

Michigan caps deposits at 1.5 months’ rent (MCL 554.601-554.616). The deposit must be held in a regulated financial institution or secured by a bond, and you must give written notice of your address and the deposit’s location within 14 days of possession, plus move-in and move-out inventory checklists. You mail an itemized list of damages within 30 days after the tenancy ends; the tenant has 7 days to respond, and you must sue within 45 days to keep disputed amounts. A move-in checklist that records the basement’s condition is your best evidence if a backup and a move-out happen close together.