Shopping is worthwhile!

The Office of Financial and Insurance Regulation (OFIR) can help by giving you the information you need to understand what affects your premium and giving you some tools to help you shop around for a lower premium.

This document is separated into topic areas. The topic areas are listed below and you can click on the topic area to access that information or you may scroll to the topic area:

How are rates developed?

Michigan's home insurance is regulated by state law on a competitive basis. This means that rates cannot be considered excessively high so long as there is competition among companies. Currently, over 100 insurance companies compete with one another for customers by offering a variety of rates and services. Insurers are prohibited from communicating with other insurers about the rates they are setting.

There are two types of homeowners policies: non-group (or individual) and group. A group policy is one offered to a group or association's members. Coverage provided by group and non-group policies generally are similar. Remember, however, that different companies offer different coverage options in their policies.

State law sets forth the factors that companies use when setting their homeowners rates. More rating factors are allowed for group policies than for non-group policies. The factors that companies can use in setting rates include the type of house (wood or brick, for example), the age of the home, physical condition of the home, number of years the owner has insured with the insurer, having multiple policies with the insurer (for example, both homeowners and automobile policies).

Companies pay out the premium money they collect when claims are filed. In setting premiums, companies must estimate how much money they will pay for the repair or replacement of homes. These costs increase annually and are one of the causes of insurance premium increases. When large numbers of claims are filed, typically following bad weather such as heavy winds, tornados, or heavy snow, companies will pay more money than they expected to pay. This increased frequency of claims is another reason that premiums will increase. Michigan insurance companies have experienced an increased number of weather-related claims over the past several years.

Insurers writing individual policies are required at least annually to provide consumers with a description of the rating classifications they use in setting rates. This notification must occur with the notice of the renewal of the insurance. The insurers also must provide consumers with a process to use if the consumer believes that the premium being charged is incorrect. Under this process, any consumer believing that the premium is incorrect based upon the rating classifications can ask for a review of the rate by the company. The Office of Financial and Insurance Regulation can review the rate if the consumer believes it still is incorrect after the company review.

Does shopping around work?

Absolutely! The over 100 companies writing homeowners insurance in Michigan are competing against the other companies to provide the lowest possible rates, broadest coverage, and best possible service. Competition works best, however, when homeowners take the time to shop for the rates and coverage that are best for them.

There are many reasons why shopping works. Let's review some of the reasons:

First, companies are offering a wide variety of rates in every area of the state. Taking some time to review the Interactive Buyers' Guide to Home & Renters Insurance in Michigan will show that this is the case.

Second, if you are eligible for coverage under law, and almost every person in Michigan is, every company must insure you.

Third, the economics of insurance are like the economics of any other product or service. Companies offering more expensive coverage that lose customers due to the cost must either lower their rates or be satisfied with fewer customers. Consumer choice can bring pressure on companies to lower their rates.

Fourth, shopping for insurance is not as hard as it seems. The next section gives you tips and the information that you need to become a knowledgeable shopper. Shopping for insurance may not be exciting, but it very possibly will save you money.

Fifth, there are many companies offering insurance. Sometimes the best rates and best service may come from a company you are not familiar with today. Taking the time to review the Buyers' Guide to Home & Renters Insurance in Michigan and the listing of agents and companies will allow you to find and contact the companies.

Sixth, every company must cover your home, wherever it is. Whether you live in Ionia, Inkster, or Iron Mountain, every company writing homeowners insurance has a rate for you, and must provide coverage. You may contact any company or agent selling insurance in Michigan and ask for a quote, even if you have to call an 800 number or make a long-distance telephone call. You don't have to live in the area in which the agent is located to get a policy from a company he or she represents.

Where do I start shopping around for my homeowners insurance?

The Interactive Buyers' Guide to Home & Renters Insurance in Michigan gives you examples of rates charged by every insurance company writing homeowners coverage. There are four example households used for which rates are displayed. The guide will not provide an exact rate for you. But it will demonstrate the wide range of rates that are available for the same coverage. The guide also will give you some idea of the comparative prices charged by the various companies doing business in Michigan.

How can the Buyers' Guide help me?

Find the household example and the rating territory in the guide that most closely resembles your personal situation. Then, compare the wide range of rates that are available from the companies listed in the guide. By doing this, you will gain a better idea of which companies might provide you with the lowest possible rate.

I've found the companies with the best rates, how do I contact the company or an agent for the company?

This web site can help you in contacting companies and agents. Review the premium information for each company listed in the buyers' guide. We have tried to provide you with a contact number, toll-free whenever possible, for each of the companies listed in the guide. You can also select any of the companies listed in the guide to receive additional contact information about that particular company. Although some insurance companies do not use local agents, you can call the companies directly to ask for a quote. In nearly all circumstances, an insurance company cannot deny you coverage based on where you live or whether they have an agent in your area.

Use our Insurance Entity Search Page to search for a list of all companies that sell property and casualty insurance (this list will include companies that sell home insurance as well as other types of property and casualty insurance such as auto insurance) or to search for a specific company. Scroll down the insurance entity page screen and either request a list of all property and casualty insurance companies or request information for a specific company. Once you have made your selection, click the "Submit" button at the bottom of the screen and you will receive information about the company/companies that you requested.

You also can find insurance agents or agencies in your area by searching information we have on our web site. You can search for a particular agent or agency by name or you can search for all agents or agencies in your area by zip code.

Your local yellow pages might also be a good place to start shopping for companies that you have heard about. Some companies, such as State Farm or AAA, have agents who represent only that company. Looking in the Yellow Pages under Insurance will tell you if there's a local agent for these companies. Other insurance agents are considered "independent" insurance agents, meaning they represent more than one company. These agents will advertise in the Yellow Pages. These agents also sometimes advertise the companies that they represent.

What information should I have available when I contact a company or an agent?

Be prepared to provide any personal information (address, telephone number, social security number, etc) and information about your home (description, square footage, fire and security devices, distance from the nearest fire department and fire hydrant).

You should also refer to the declaration page of your current home insurance policy for your current coverage and limits. The declaration page is the page of your policy that lists all of your current coverages and limits as well as the current premium you are paying for each of those coverages. This information will provide useful information to any agent/agency/company that is providing you with a quote. It may make the process even easier if you provide a copy of your current declaration page to anyone providing you with a quote to make sure his or her quote is for coverage that is similar to what you already have.

If you are uncomfortable releasing this information, you should be able to answer questions about your current coverage over the telephone without providing a copy of your declaration page.

What are the questions that I should ask while shopping for homeowners insurance?

There are two basic questions to ask any agent or company representative: what losses does your policy cover, and what losses are not covered by the policy? In addition to these questions, you should ask what additional coverage you might need given your situation. Most companies provide a number of additional coverages, often called "riders" or "endorsements". Examples of additional coverage include such things as jewelry, furs, firearms, and backup of sewers and drains.

Michigan law also allows companies to provide discounts on the cost of coverage. Most people will be eligible for one or more discounts with a company. Although agents and company representatives generally will tell you the discounts for which you are eligible, be certain to ask about them. They can save you money.

You should also ask about group discounts that might be available. Membership in some associations or groups might qualify you for a discounted group policy.

You are eligible for a wide variety of coverages. Be certain to ask for the coverage that meets your specific needs. When you are deciding which type of policy suits your needs, consider what your house is worth, how much it would cost to replace it, and how much you can afford to spend for insurance.

You can find out more by reviewing the Homeowners Insurance Replacement vs. Repair Cost Policies and the Buyers' Guide to Home & Renters Insurance in Michigan (refer to page five for an explanation of home insurance coverage types) publications.

What information will the agent give to me while I'm shopping?

An agent is required to give you the lowest available premium quote from among the companies she or he represents. You may want to contact another agent or agency and ask for additional quotes, since an agent can only quote premiums for the companies that they represent. You can search for an agent or for an agency on our web site.

What other information should I know about a company?

Service on your policy is an important part of the contract of insurance that you are purchasing. Service includes such things as properly crediting your account with your premiums, and the manner in which claims for losses that you might file are handled.

It is not likely, but possible, that a dispute may arise between you and your insurance company over some aspect of the policy. Typically, this occurs as you negotiate the settlement of a claim that you've filed for damage that occurred at your home. This office can help people who are having difficulties with their company. As we do so, we keep track of the number of times that we receive a concern or complaint about a company. This information will give you a better idea about whether current policyholders file complaints against the company, and if they do what types of things they complain about.

This information may help you decide whether to insure with a particular company. Click here to display complaint ratio information. And remember, this information is just one factor for you to consider in whether to insure with a company.

How might I reduce my premium if I want to stay with my current insurance company?

There are a number of ways that you might reduce the cost of your insurance. For example, you might ask about premium savings if you increase your deductibles. Doing so will mean that you pay more out of your pocket should a loss occur, but it will reduce the premium you pay.

You also could ask about steps you could take to receive a discount on your premium from the company. For example, some companies reduce your premium if you have a security system or working smoke detectors in your home.

Also, you might ask about group discounts that might be available. Membership in some associations or groups might lower your premium.

The Buyers' Guide to Home & Renters Insurance in Michigan gives you some additional ideas about saving money on your premium. Click here to go to the guide and review page 7 for this information.

What does it mean to be ineligible for coverage?

You cannot be denied insurance solely because of the age of your house, its location, or the type of neighborhood you live in. However, there are a few reasons why a company can refuse to insure you. If an agent or company says that your house is not eligible for coverage, they must give you the specific reason that you are not eligible for a homeowners policy with that company.

You can learn more about ineligibility by reviewing our publication Homeowners Insurance: Are You Eligible?

If you are not eligible for coverage directly from a company, you are still eligible for coverage with Michigan Basic Property Insurance Association. This entity is created by state law, but it is not a part of state government. You can find out more by reviewing the publication Michigan Basic Property Insurance Association. Although Michigan Basic's rate may be higher than if you insured directly with an insurance company, any agent must submit an application to Michigan Basic if you request him or her to do so.

Finally, if you have questions, please call us toll free at 1-877-999-6442 so that we can help by answering your questions.

What statements should I never hear from an insurance agent or an insurance company?

Michigan law makes it illegal for an insurance company or an insurance agent to do certain things. We want to know if you are told any of the following statements as you talk with an agent or a representative of a company. Call us immediately toll free at 877-999-6442 if you're ever told any of the following (in a very limited number of circumstances these statements might not be illegal, but our office can verify this for you):

• We don't write in that area
• We aren't taking any new customers
• We don't have an agent in your area
• Your house is too old
• We can't write your homeowners insurance unless you insure your automobile with us
• You aren't eligible for a policy with our company (no explanation of ineligibility is provided) but we can place you with Michigan Basic

We want to know if you have a problem shopping for homeowners' insurance.

We want to know if you have a problem with an agent/agency or insurance company during the process of shopping around for coverage. If you disagree with an insurance company about whether you are eligible for coverage, try to resolve the issue with the insurance company. If you still do not agree with the company position, ask them to provide specific rules or language that they believe excludes you from eligibility. If you are still dissatisfied, please contact our Consumer Services Division toll free at 877-999-6442 to ask questions or to file a written complaint against the company or agent/agency obtain a copy of the complaint form. You can click here to access the various complaint forms provided by OFIR.

Complete our online survey.

Our goal is to provide you with the information that makes the process of shopping for insurance as easy as possible. We want to know if our web site and our staff are providing you with the tools to make this process work for you. So please take a few minutes of your time and let us know how we're doing and what we can do to do a better job for you by completing our online survey! We also invite you to return to our survey once you've finished shopping and let us know if our site was helpful to you.