="http://www.w3.org/2000/svg" viewBox="0 0 512 512">

Main Body

Other Coverages and Options

National Flood Insurance Program (NFIP)

This program was created in 1968 by congress to reduce the costs of the disaster within communities. The Federal Emergency Management Agency (FEMA) administers NFIP. The definition of flooding is a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from overflow of inland or tidal waters, from unusual and rapid accumulation or runoff of surface waters from any source, or from mudflow.

Write your own vs Government

Most flood policies are written by private insurers. The Write Your Own Program was formed in 1983


If the community agrees to adopt and enforce flood control and land use measures, most building and their contents can be insured.


There is a 30-day waiting period for new applications and endorsements. One exception will be new home purchases.


Building coverage regular limits is $250,000 for residential and $500,000 for non-residential. For the emergency program the limits are $35,000 for single and two family dwellings, $100,000 for other residential and non-residential.

Contents coverage regular limits are $100,000 for residential and $500,000 for non-residential and small business. Emergency program contents coverages is $10,000 for residential and $100,000 for non-residential.


These apply separately to both the building and the contents. The higher the deductible, the lower the premium.

Other policies


There may be up to $15000 of Boatowners coverage on a homeowners policy. Direct damage from wind and storm may only be coverage if stored inside a dwelling. Theft will be excluded if located off premises.

Boatowners package policy provides insurance coverage for physical damage, medical expense, liability and other coverages.


Surplus lines

Definitions and markets

Any type of insurance in which there is no available coverage within the state. Coverage will be placed with a nonadmitted insurer. Nonadmitted insurers are not licensed to do business with that state.

Licensing requirements

A surplus lines broker is licenses to write business with nonadmitted insurers


Dwelling Policy

Owners of residential property

Does not qualify for homeowners

Rented dwelling

Business in dwelling

Three types of dwelling policies

DP-1 (basic), DP-2 (broad), DP-3 (special)

No theft or liability coverage unless added

Dwelling Policy: Eligible Property

Non-owner occupied- dwellings

Owner Occupied with Business

Owner Occupied with more than 2 roomers

Non-owner occupied to insure Personal Property


Causes of Loss Forms Perils

DP–1 basic—named peril

DP–2 broad—named peril

DP–3 special—open peril



Same as homeowners. RC on A and B. ACV on C


Coverage A – Dwelling

Coverage B – Other Structures

Coverage C – Personal Property, Insured specifies amount, if needed

only 10% away from premises

Coverage D – Fair Rental Value

Coverage E – Additional Living Expenses

Other coverages

General Exclusions



Dwelling Endorsements

Selected endorsements

Special provisions –Michigan

Automatic increase in insurance

Broad theft coverage

Dwelling under construction



Automatic increase in insurance (inflation guard)

Provides for an annual specified percent increase in Coverage A


Theft coverage—theft of personal property

Broad theft

Available only if insured is the owner-occupant of the dwelling

Available for both on and off premises exposures

Limited theft

Available when insured is not owner-occupant

On premises only


Personal Liability Coverage $100,000

Additional Coverages and Other Options – Liability

Umbrella/Excess Liability Policies

-Personal Umbrella insurance is a type of insurance designed to add extra liability coverage over and above another insurance policy, such as auto or homeowners insurance. Accidents happen in life – and sometimes, they can have financial consequences if you’re held liable.

-Commercial Umbrella increases your liability coverage to provide extra payouts that help you cover substantial claims. This type of insurance can feasibly protect your company from any liability claim, including libel, reputational damage, vehicular accidents, product liability, or customer injury.

Specialty Liability Insurance

– Errors and omissions insurance, also known as E&O insurance and professional liability insurance, helps protect you from lawsuits claiming you made a mistake in your professional services. This insurance can help cover your court costs or settlements, which can be very costly for your business to pay on its own.

– Directors and officers (D&O) liability insurance protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.

– Fiduciary liability insurance is intended to protect businesses and employers against claims resulting from a breach in fiduciary duty. Essentially, the policy protects parties against liability for managing or administering employee benefits plans.

– Liquor liability insurance protects businesses that manufacture, serve, or sell alcohol. The policy provides coverage for legal fees, settlements, and medical costs associated with bodily injury or property damage caused by an intoxicated person, who was served or sold liquor by the policyholder.

– Employment Practices Liability Insurance (EPLI) — a type of liability insurance covering wrongful acts arising from the employment process. The most frequent types of claims covered under such policies include: wrongful termination, discrimination, sexual harassment, and retaliation.

Surety Bonds

-Bonds are different than what has been discussed previously in this book. Bonds have three parties and insurance only has two involved in the contract. Bonds also do not experience losses.

-The Principal of the bond is the one that is typically doing the work.

-The Obligee is typically the company promising the work being completed.

-The Surety is the one backing up the entire project, the Bonding Company.

-A contract bond is a type of surety bond that guarantees contracts are fulfilled. If the contracted party fails to fulfill its duties according to the bond’s terms, the project developer can make a claim on the bond to recover financial losses. Contact Bonds include Bid Bonds, Completion Bonds, Labor and Material Bond, and Supplier Bonds.

-License and Permit Bond required by a municipality or other public body as a condition to granting a license or permit to engage in a specified activity, this bond guarantees that the party seeking the license or permit will comply with applicable laws or regulations. License and Permit Bonds include Auto Dealership Bonds, Notary Bonds, and Surplus Lines Bonds.

-Judicial bond is a bond required by the courts in order to secure a party’s costs of appeal, attachment, and injunction. In other words, it is a bond filed with the court as a guarantee. For example, a party to a court action can post a judicial bond to guarantee payment of a verdict while an appeal is considered. Executor, Bail, and Court bonds are examples or Judicial Bonds.


Icon for the Creative Commons Attribution-ShareAlike 4.0 International License

Michigan Property Casualty Insurance by stuckom and aldricd is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License, except where otherwise noted.

Share This Book