Costs & insurance
Homeowners insurance
A policy covering damage to your home and belongings and liability on your property. Lenders require it, and it's collected through escrow as part of your monthly payment.
What does homeowners insurance mean?
Homeowners insurance protects the home securing your mortgage, so lenders require it and typically collect it monthly through escrow. Coverage pays to repair or rebuild after events like fire or storms and provides liability protection.
In Michigan, factors like proximity to a lake, an older roof, or a home's age affect the premium, and lakefront properties may need separate flood coverage that materially changes the monthly cost.
Shop it separately from your mortgage — the policy is yours to choose, and premiums vary widely between carriers for the same house.
A Michigan example
Two nearly identical $285,000 homes can carry very different premiums: one inland with a new roof, the other near a lake with an aging roof and a possible flood-coverage requirement.
Because the premium is collected through escrow, that difference flows straight into the monthly payment — the same way property taxes do.
Common questions
Why do lenders require homeowners insurance?
It protects the home securing their loan against fire, storms, and liability claims. Lenders require it and usually collect the premium monthly through escrow so coverage never lapses while you owe on the mortgage.
What affects my Michigan insurance premium?
The home's age and roof condition, proximity to water, claims history, and coverage limits. Lakefront properties may need separate flood coverage that raises the total, since standard policies don't include flood damage.
Can I choose my own insurer?
Yes — the policy is yours to shop, and premiums vary widely between carriers for the same house. Compare a few quotes before closing rather than accepting the first one, since the cost flows into your monthly escrow.
Related terms