Situated on the Great Lakes region in the upper Midwest, Michigan is the 10th most populous state in the US, making it an attractive market for many real estate investors. Home prices are steadily increasing year over year, but are still well below the national average.
The average Fair Market Rent for a 2-bedroom property in Michigan is $815, but there are big differences between the cities, with Allendale and Ann Arbor being among the most expensive areas, and Lansing and Saginaw being among the more affordable places to rent.
What is landlord insurance?
Landlord insurance is a specialized insurance product designed specifically for properties that are rented out. It differs from homeowner's insurance in that it caters to the unique needs and risks associated with rental properties, while homeowners' insurance is built on the premise that the property owner lives in the property.
While there may be similarities between standard homeowners insurance and landlord insurance, it's important to recognize that renting out a property turns it into a business venture. As such, landlords should approach their insurance needs from a business owner's perspective rather than solely as property owners.
Landlord insurance offers tailored coverage to address the additional risks involved in renting out a property. Along with providing coverage for the physical structure of the home, this type of insurance typically includes a more comprehensive liability coverage package compared to standard homeowners insurance. It may include general liability coverage and can also provide protection for lost rental income under certain circumstances.
Special Considerations for landlord insurance in Michigan
In Michigan, there is no law that requires landlords to have landlord insurance, but lenders will most likely require it when taking a mortgage to finance the rental property. In any case, it’s highly recommended to obtain tailored landlord insurance when you start renting out your property considering the different risks that come with it.
Some of the most important coverages for landlords are:
- Dwelling coverage - aka the structure of the property. The most important aspect of this coverage is to insure for replacement cost and not actual cash value. In the unfortunate event that you would have to rebuild the property from scratch, you want to make sure your insurance policy would cover it.
- Liability coverage: As a landlord, it’s important to have general liability coverage and not just personal liability coverage. General liability coverage offers safeguards to landlords in the event that they are held legally accountable for causing harm or damage to a third person on or near their property. It may include expenses related to legal defense, settlements, or court-awarded damages when the landlord faces a lawsuit. General liability insurance commonly provides protection for bodily injury, property damage, personal injury (such as false accusations or unlawful eviction), and advertising injury (such as plagiarism or misleading advertisements).
- Business income coverage: If the property becomes temporarily vacant due to a covered peril, landlord insurance can cover the loss of rental income. For example, if the rental unit needs to be vacated in order to fix the roof after a windstorm and you would not be able to generate rental income for 15 days as a results, your landlord insurance may very well cover this.
In addition, there are many extra coverages you can add to the policy in order to get extra protection. An enhanced ordinance or law coverage helps ensure that if you have to rebuild the property or parts of the property, it would be according to local regulations and requirements that may have changed since the property was built. Equipment breakdown is another optional coverage that offers added protection if you have expensive machinery or equipment on the rental property.
How much does landlord insurance in Michigan cost?
Property insurance will always vary greatly depending on the size of the property, the local area, standards and facilities, and the specifics of your policy. The national average is around $1,288 per year, and the prices in Michigan seem to be on par with that. The ideal way to find out how much your rental property would insure for is simply by getting a quote. You can get a quote from Honeycomb here in a couple of minutes by simply filling in some basic information.
Can a landlord in Michigan require renters insurance?
While it’s not mandatory, under Michigan law, landlords have the authority to require renters insurance as a condition for renting a property. The law allows landlords to include provisions in the lease agreement that mandate tenants to obtain and maintain renters insurance throughout their tenancy. This requirement is designed to provide protection for both the landlord and the tenant in case of unforeseen events or liabilities.
Is Michigan considered landlord friendly?
Michigan is generally considered to have laws that are favorable to landlords, making it a landlord-friendly state. The state's laws tend to prioritize and protect the rights of property owners. For example, Michigan provides landlords with a streamlined eviction process and allows for the quick removal of tenants who violate the terms of their lease agreements.
Michigan does not have rent control laws, which means landlords have more flexibility in determining rental rates. However, it's important to note that specific laws and regulations can vary, and it’s vital to check local laws and regulations before making any changes to the conditions of the lease agreement or the property.