Know Your Options: Home Insurance in Michigan for Your Fixer-Upper
For prospective homeowners in Michigan who are on a tight budget, a fixer-upper house can be an attractive option as they browse through property listings. Buying an affordable but slightly broken-down house to refurbish can sometimes be the more sensible choice compared to buying a brand-new yet very expensive one. However, there are some pitfalls waiting for anyone who goes down this path. One of the major ones is the difficulty of getting home insurance in Michigan.
Insurance may not be the first thing to spring to mind when you’ve just bought a home, but it is important in keeping your investment safe. The problem is that insuring a property that requires considerable repairs and maintenance work is not easy. Abby Hayes, a freelance blogger and journalist, recently wrote an article for U.S. News Money about the hesitance of insurers to provide coverage for a fixer-upper home:
“Fixer-upper homes – especially those that have been foreclosed on or abandoned – are a higher risk for insurance companies. The fixing up process itself comes with some risks, including problems that might occur when no one is living in the home during the renovation process.”
The risks associated with fixer-uppers are not exactly smiled upon by insurance companies – but fret not, for there are still insurance options available. At the very least, you will have to pay a higher premium. Before anything though, you will likely need to hire a home inspector to go over your property; this gives you an idea on how much the property is worth and makes it easier for insurance companies to provide you with a quote.
If you can have the home repaired and you’ll be able to move in within a month, it will probably be easy to get basic homeowners insurance in Michigan from insurers like Allied Insurance Managers, Inc. This is probably the easiest option, but if the repairs take longer, there are specialized insurance packages available.
Builder’s risk and vacant dwelling policies are common examples of policies offered for owners of fixer-uppers. The former is for homes needing a lot of renovation work and starts at a low price and increases as the repairs progress. The latter is used for homes that only need cosmetic improvements but stand empty while the work is done. It doesn’t protect from theft, though.
If a place is livable, but will need a lot of work done, a good choice would be to sign up for an HO-8 policy. For renovations that will take a really long time like when you decide to do the repairs yourself, a FAIR (Fair Access to Insurance Requirements) plan can provide basic protection, which is definitely better than nothing.
(Source: 5 Ways to Get Insurance on Your Fixer-Upper Home, U.S. News, April 20, 2014)