Michigan HOA Insurance Requirements

Section 1: Overview — How HOA insurance is regulated in Michigan

Michigan imposes association insurance obligations on condominiums through the state-specific Michigan Condominium Act, and because many Michigan detached-home developments are organized as site condominiums under that Act, the condominium insurance framework reaches a broad set of communities, while true non-condominium planned communities rely on the recorded declaration. The Condominium Act lists insuring co-owners against risks affecting the project as a permissible bylaw provision at MCL 559.156, and the operative duty to carry insurance comes from the Department of Licensing and Regulatory Affairs' Administrative Rule R 559.508.¹² Non-condominium planned communities have no dedicated statute and therefore no statutory insurance mandate; their coverage runs off the recorded CC&Rs together with corporate formalities under the Michigan Nonprofit Corporation Act.⁵ The Condominium Act is state-specific, not a version of the 1980 Uniform Condominium Act or the 1982 UCIOA, so its insurance provision must be read from the actual Michigan text rather than from uniform-act machinery.³ Fidelity (crime) and directors-and-officers (D&O) coverage aren't statutory mandates in Michigan and typically run declaration-driven or lender-driven.¹ Nationally, Michigan sits apart from the UCA/UCIOA condominium-mandate states and from the comprehensive prescriptive states such as Florida and California; its state-specific statute and heavy use of site condominiums extend the condominium framework to many detached-home developments that would be planned communities elsewhere.⁴ The sections below detail the statutory framework, coverage allocation, and recent activity.

Section 2: The statutory insurance framework

2A. The condominium insurance mandate

Condominium ownership in Michigan is governed by the Condominium Act, MCL 559.101 et seq., a state-specific statute enacted as Act 59 of 1978.³ The Act's direct reference to insurance appears at MCL 559.156, titled "Bylaws; permissible provisions," which states that the bylaws "may contain provisions … (c) For insuring the co-owners against risks affecting the condominium project, without prejudice to the right of each co-owner to insure his condominium unit or condominium units on his own account and for his own benefit."¹ Because this section is permissive, the enforceable duty to carry association insurance comes from LARA Administrative Rule R 559.508, which requires that the bylaws provide that the association carry insurance for fire and extended coverage, vandalism and malicious mischief, and, if applicable, liability and workers' disability compensation, pertinent to the ownership, use, and maintenance of the premises, with all premiums treated as an expense of administration.² The Act is state-specific and doesn't incorporate the 1980 UCA or 1982 UCIOA; reading its insurance obligation therefore begins with MCL 559.156, R 559.508, and the recorded documents, not with any uniform-act text.³

Several features common to UCA Section 3-113 are absent from the Michigan text and shouldn't be attributed to it. The Michigan provision and R 559.508 contain no replacement-cost valuation mandate, no separate commercial general liability mandate, no "reasonably available" qualifier, no improvements-and-betterments exclusion, and no structured statutory deductible-and-owner-charge scheme; these stay absent unless a project's own master deed or bylaws supply them.¹² On casualty, the Act operates through mandatory bylaw content rather than a self-executing proceeds formula: MCL 559.154(3) requires the bylaws to contain specific provisions directing the courses of action to be taken on partial or complete destruction of the buildings, and MCL 559.154(4) requires that insurance proceeds securing the co-owners' interest be treated as receipts of administration.¹⁰ Administrative Rule R 559.506 separately requires the bylaws to set forth the co-owners' rights and the procedures to follow in case of partial or complete destruction or condemnation.¹³ Deductible allocation isn't addressed by the statute or the rule and is left to the master deed and bylaws.¹

2B. Planned communities and the absence of a statutory mandate

Non-condominium planned-community associations in Michigan have no dedicated statute and no statutory insurance mandate; their insurance is set entirely by the recorded declaration and CC&Rs.⁵ For condominiums, the order of precedence runs from the Condominium Act and its administrative rules — to the extent they speak to insurance — to the master deed, then the bylaws, then the rules.³ For planned communities, the declaration is the primary source, with no overriding insurance statute above it. Where a planned-community or condominium association is incorporated, it's typically organized under the Michigan Nonprofit Corporation Act, MCL 450.2101 et seq., which governs director conduct and indemnification but is a corporate code, not an insurance mandate.⁵ The practical implication is direct: for a planned community, coverage analysis begins and ends with the declaration and any applicable lender requirements.

2C. The declaration, corporate law, and the federal and market overlay

For condominiums, the master deed and bylaws carry most of the operational insurance detail and may vary the defaults; for planned communities, the declaration is the sole source of the association's coverage obligations.¹ Certain condominium amendments that eliminate or reallocate the association's insurance obligation require first-mortgagee approval under MCL 559.190a(9).¹¹ Fidelity and D&O coverage aren't statutory in Michigan; they run declaration-driven or lender-driven. The Nonprofit Corporation Act permits indemnification of directors and officers but doesn't require the corporation to purchase insurance.⁹ A federal and secondary-market overlay applies independently of state law: Fannie Mae, Freddie Mac, FHA, and the National Flood Insurance Program impose their own project-insurance conditions on associations whose units are financed conventionally or through FHA, including planned communities with no statutory floor, and these frequently exceed any Michigan requirement, driving fidelity, flood, and property decisions.⁶⁸¹⁴¹² Michigan's market context shapes availability and cost rather than legal duty: dominant exposures are severe winter perils — heavy and lake-effect snow load, ice dams, frozen and burst pipes — severe convective storms (wind and hail), and Great Lakes shoreline and riverine flooding, with no ocean coastal windstorm exposure and limited wildfire exposure.⁴ Carrier conduct in that market is overseen by the Michigan Department of Insurance and Financial Services, which regulates insurers and market conduct, not the coverage an association must buy.¹⁵

Section 3: Coverage allocation and compliance obligations

A. Association coverage obligations

For condominiums, the master policy must carry the coverage set by R 559.508 — fire and extended coverage, vandalism and malicious mischief, and, if applicable, liability and workers' disability compensation — over the common elements and any property the association must maintain, repair, or replace under the bylaws; this obligation is mandatory, but its limits and scope are fixed by the master deed and bylaws.² For planned communities, no statutory floor exists, and the master policy the association must carry is whatever the declaration requires — contractual, not statutory.⁵

B. Coverage allocation between association and owners

The association's policy reaches the common elements and property the association is responsible for; it doesn't reach the unit interior, owner improvements and betterments, or personal property, which the co-owner insures through an individual unit owner (HO-6) policy, as MCL 559.156(c) expressly preserves each co-owner's right to insure the unit.¹ This split applies to condominiums under the Act; in planned communities the same division is set by the declaration rather than statute.⁵ Loss-assessment coverage on the owner's individual policy addresses amounts an owner may be charged for shortfalls; it's a contractual insurance product, not a statutory obligation.¹

C. Deductibles, proceeds, and repair-or-replace

Michigan's statute and rules don't assign the master-policy deductible; allocation is governed by the master deed and bylaws for condominiums and by the declaration for planned communities.¹ For financed projects, Fannie Mae and Freddie Mac separately cap the master-property deductible at 5% of the coverage amount for any required peril, a lender ceiling rather than a state-law allocation rule.⁶ For condominiums, MCL 559.154(4) treats insurance proceeds securing the co-owners' interest as receipts of administration, and MCL 559.154(3), reinforced by R 559.506, requires the bylaws to direct the courses of action on partial or complete destruction, which is where the obligation to rebuild and the handling of proceeds are actually specified.¹⁰¹³ Owner exposure for uninsured amounts, including a deductible charged back to a unit, is a function of the bylaws and the owner's loss-assessment coverage, not a statutory formula.¹

D. Fidelity, D&O, and disclosure

Fidelity/crime and D&O coverage run declaration-driven or lender-driven, not statutory, for both condominiums and planned communities; Fannie Mae, for example, requires fidelity/crime coverage for projects with more than 20 units and accepts any state statutory requirement in place of its own, of which Michigan has none.¹⁸ A separate, narrow statutory insurance duty falls on the co-owner: under MCL 559.147a(3), a co-owner who makes an exterior improvement or modification — an accessibility ramp, for example — must maintain liability insurance naming the association as an additional insured.¹⁶ On disclosure, MCL 559.168 requires a condominium association to keep the master deed, amendments, and other condominium documents available at reasonable hours to co-owners, prospective purchasers, and prospective mortgagees, and the LARA mortgage rule requires the association to furnish an individual mortgagee with complete information on all insurance the association carries.¹⁷¹³ These document-availability duties are statutory for condominiums; for planned communities any comparable duty is contractual under the declaration.⁵

Section 4: Recent legislative and judicial activity

A. Recent bills

No bill in the current Michigan legislative session amends the Condominium Act's insurance provisions — MCL 559.156, MCL 559.154, or Administrative Rule R 559.508. The closest active measure concerns reserve funding, which bears indirectly on the cost of repair and replacement rather than on insurance obligations.

B. Recent appellate rulings

No Michigan Court of Appeals or Michigan Supreme Court decision issued in the past 36 months squarely addresses condominium or HOA insurance coverage allocation, master-policy scope, deductible disputes, or application of insurance proceeds. The most consequential recent state appellate decision affecting association risk is a premises-liability ruling that bears on liability exposure and therefore on liability-insurance cost.

A related property-insurance dispute involving a Michigan association-type policyholder, Piatt Lake Bible Conference Association v Church Mutual Insurance Co., was decided in the federal courts — not a Michigan state appellate court — and held that a policy's ordinance-or-law sublimit capped code-upgrade recovery, leaving replacement-cost coverage short of full rebuilding cost; it's noted here only as a federal illustration, not as Michigan law.²⁰

C. Active legislative debates

The most material recent pressure on Michigan association insurance is market-driven, tied to winter-peril and water-damage claim costs, rather than statutory. Legislative attention has centered on reserve studies (HB 5784) rather than on amending the Act's insurance provisions.¹⁸

Section 5: National positioning and related coverage

Michigan occupies a distinct position among three broad groups: condominium-statute states on the UCA or UCIOA model that impose a Section 3-113 insurance mandate; comprehensive non-uniform prescriptive states, notably Florida (Chapter 718) and California (Davis-Stirling); and CC&R-primary states such as Alabama and Arkansas. Michigan's condominium statute is state-specific rather than uniform, and because Michigan makes heavy use of site condominiums, the condominium insurance framework reaches many detached-home developments that would be planned communities elsewhere.⁴ For a multi-state operator entering Michigan, condominium insurance obligations follow the state-specific Condominium Act and its administrative rules rather than a uniform model, site condominiums extend that framework to many detached-home developments, and Great Lakes winter and flood exposure stand as Michigan-specific market factors. Michigan hasn't recently amended the Condominium Act's insurance provisions, and no such amendment is pending.¹⁸

HOA Weekly updates its Michigan Insurance Requirements coverage quarterly as the Legislature and the Michigan Supreme Court act and as the property-insurance market shifts. Federal frameworks — Fannie Mae, Freddie Mac, FHA, NFIP, and FHA fair-housing accommodation rules — also apply to Michigan associations regardless of the state framework, with fuller treatment to follow once that coverage is built out.

1. Michigan Condominium Act, MCL 559.156, "Bylaws; permissible provisions" ↩
2. Michigan Administrative Code R 559.508 (Condominium Administrative Rules, LARA) ↩
3. Michigan Condominium Act, Act 59 of 1978, MCL 559.101 et seq. ↩
4. LARA, The Condominium Buyer's Handbook (site condominium definition and practice) ↩
5. Michigan Nonprofit Corporation Act, Act 162 of 1982, MCL 450.2101 et seq. ↩
6. Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments ↩
7. Fannie Mae Selling Guide B7-4-01, General Liability Insurance Requirements for Project Developments ↩
8. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments ↩
9. Michigan Nonprofit Corporation Act, MCL 450.2562 (indemnification power) ↩
10. Michigan Condominium Act, MCL 559.154(3)-(4) ↩
11. Michigan Condominium Act, MCL 559.190a(9) ↩
12. FHA/HUD, Condominium Project Approval Required Documentation List ↩
13. Michigan Administrative Code R 559.506 and R 559.507 (LARA Condominium Administrative Rules) ↩
14. Fannie Mae Selling Guide B7-3-06, Flood Insurance Requirements for All Property Types ↩
15. Michigan Department of Insurance and Financial Services, Insurance Market Regulation ↩
16. Michigan Condominium Act, MCL 559.147a(3) ↩
17. Michigan Condominium Act, MCL 559.168 (availability of condominium documents) ↩
18. Michigan House Bill 5784 (2025-2026) ↩
19. Janini v London Townhouses Condominium Ass'n, 514 Mich 86, Mich Sup Ct Docket No. 164158 (July 11, 2024) ↩
20. Piatt Lake Bible Conference Ass'n v Church Mutual Ins Co, US Court of Appeals for the Sixth Circuit, No. 25-1689 ↩