Key Takeaways
- Michigan commercial property insurance uses file and use rate regulation
- Surplus lines placement requires diligent search of 3 admitted insurers
- Michigan surplus lines tax is 2% of premium
- Commercial policies must comply with Michigan Insurance Code provisions
- Business interruption coverage follows standard commercial forms
Last updated: January 2026
Michigan Commercial Property Insurance
Michigan regulates commercial property insurance with specific requirements for rates, surplus lines, and coverage availability.
Rate Regulation
Under Michigan file and use system, commercial property insurance rates:
- Are filed with DIFS
- Can be used after filing
- Must be actuarially supported
- Cannot be excessive, inadequate, or unfairly discriminatory
- Subject to DIFS review and potential disapproval
Commercial Rate Filing
| Requirement | Details |
|---|---|
| Filing | Required |
| Approval | Not required before use |
| Review | DIFS reviews after filing |
| Disapproval | DIFS can disapprove after review |
Commercial Property Coverage
Michigan commercial property follows standard forms:
Coverage Types
| Coverage | Description |
|---|---|
| Building | Structure and permanently attached items |
| Business Personal Property | Contents, inventory, equipment |
| Business Income | Lost income during restoration |
| Extra Expense | Additional costs to continue operations |
| Equipment Breakdown | Mechanical/electrical breakdown |
Valuation Methods
- Replacement Cost: Full cost to replace without depreciation
- Actual Cash Value: Replacement cost minus depreciation
- Agreed Value: Pre-agreed amount for total loss
- Functional Replacement: Similar property, not identical
Business Interruption Insurance
Michigan commercial policies include business interruption provisions:
Key Provisions
- Coverage for lost income during restoration period
- Waiting/deductible period typically 72 hours
- Period of restoration clearly defined
- Extended period of indemnity available
- Civil authority coverage for government-ordered closures
Surplus Lines Insurance
Michigan allows surplus lines insurance for risks not available in the admitted market:
Surplus Lines Requirements
| Requirement | Details |
|---|---|
| Diligent Search | Must contact 3+ admitted insurers |
| Surplus Lines Agent | Must use licensed SL agent |
| Surplus Lines Tax | 2% of premium |
| Stamping Fee | Additional fee may apply |
| Disclosure | Must disclose SL status to insured |
Diligent Search Process
- Contact at least 3 admitted insurers
- Document declinations
- File affidavit with DIFS
- Place with eligible surplus lines insurer
- Collect and remit surplus lines tax
Eligible Surplus Lines Insurers
- Must be on DIFS approved list
- Must meet financial requirements
- Cannot solicit business directly in Michigan
- Subject to DIFS oversight
Terrorism Insurance
TRIA (Terrorism Risk Insurance Act)
- Federal program providing terrorism insurance backstop
- Michigan insurers must offer terrorism coverage
- Policyholder can accept or reject
- Disclosure of coverage terms required
Builders Risk
Michigan builders risk insurance:
- Covers buildings under construction
- Available on completed value or reporting form
- Theft coverage may require endorsement
- Transit coverage for materials available
- Contractor or owner can purchase
Test Your Knowledge
How many admitted insurers must be contacted before placing a risk in the Michigan surplus lines market?
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Test Your Knowledge
What is the Michigan surplus lines tax rate?
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