Community Association Insurance in Michigan

Michigan at a glance

Condo statute

Michigan Condominium Act, MCL 559.101 et seq.

Requires common-element insurance; proceeds allocation follows the master deed.

HOA structure

Nonprofit corporation under covenants, no dedicated HOA statute

Insurance authority comes from the recorded declaration, not a state HOA act.

Fidelity requirement

No statutory minimum bond amount

Board sets coverage based on account balances and management-company terms.

Cat exposure

Lake-effect snow, ice damming, and Great Lakes shoreline erosion

Distinct from typical Midwest wind/hail exposure for shoreline communities.

Michigan Condominium Act insurance requirements

The Michigan Condominium Act requires the association to obtain and maintain insurance covering the condominium's common elements against fire and other hazards, and directs that the master deed and bylaws govern how casualty proceeds get applied to repair, rebuild, or, in limited circumstances, terminate the condominium. Associations should have current copies of their master deed reviewed alongside their master policy periodically, since older Michigan condominium documents — many dating to the state's 1970s and 1980s condo boom — sometimes predate common industry practices like all-in coverage allocation or ordinance-or-law endorsements that newer declarations build in from the start.

Nonprofit-corporation HOAs outside the Condominium Act

Michigan does not have a dedicated homeowners' association statute comparable to its Condominium Act, so most single-family HOAs are formed as nonprofit corporations under the Michigan Nonprofit Corporation Act and rely on their recorded declaration of covenants for insurance authority and assessment power. That means a Michigan HOA's insurance obligations come almost entirely from its own governing documents, making a periodic covenant and insurance review — ideally coordinated between the board, its management company, and an agent familiar with the specific declaration — more important than in states where a statute fills gaps in an outdated document.

Fidelity coverage and volunteer treasurer risk

As in most licensed states, Michigan's most common community-association crime loss involves a treasurer, board member, or management-company employee with signing authority over assessment or reserve accounts, and because neither the Condominium Act nor typical Michigan nonprofit bylaws set a fidelity-bond minimum, the coverage amount is a board decision rather than a statutory floor. Associations working with a third-party management company should confirm the company's own fidelity policy responds before, or alongside, the association's coverage, since a coverage gap between the two is a recurring source of disputed claims.

Freeze, ice-dam, and lake-effect snow exposure

Michigan associations across the state, and especially in the lake-effect snowbelt along Lake Michigan's eastern shore, face heavy roof-snow loads, ice-damming, and freeze-related plumbing losses that are among the most frequent property claims for condominium and townhome associations. Reserve schedules should account for the accelerated wear these conditions place on roofing membranes and gutter systems, and boards should confirm their master policy addresses water damage from ice damming specifically rather than assuming it falls under a general water-damage grant.

Great Lakes coastal erosion and shoreline associations

Condominium and HOA communities along Michigan's Great Lakes shoreline face periodic high-water cycles and bluff erosion that have damaged or threatened structures in several lakeshore communities over the past decade, a distinct exposure from typical Midwest wind and hail risk. Shoreline associations should discuss earth-movement and erosion exclusions with their agent specifically, since standard property forms often treat erosion differently from wind or water damage, and confirm current shoreline-setback and insurance requirements with association counsel given how lake-level cycles have shifted risk in recent years.

Who we write this for in Michigan

Community association FAQs for Michigan