Michigan Business Insurance: 3 Storm-Season Coverage Gaps to Check
Michigan’s summer storms don’t care what your policy says — and the claim is where a lot of business owners find out what their coverage actually does. Here are three gaps that catch people every storm season, and how to close them before the next one rolls through.
Gap 1: Flood usually isn’t covered
This is the one that surprises owners most. A standard commercial property policy covers wind and hail — but it excludes flood. Rising water from a downpour, an overwhelmed storm drain, or a swollen creek is a flood, and without separate flood coverage, that claim gets denied.
Its close cousin, sewer and water backup, is usually excluded too unless you’ve added an endorsement for it — and a backup is one of the most common ways water actually reaches a Michigan basement or ground floor. Both are inexpensive to add. Neither is there by default.
Gap 2: Business interruption — the coverage people forget
Property coverage repairs the building. It does nothing for the two, four, or eight weeks you can’t open while the work happens. That’s what business interruption (business income) coverage is for — it replaces the income you would have earned and keeps covering payroll, rent, and loan payments while you’re shut down.
Two things to check: whether you carry it at all, and whether the limit and the covered period are realistic. If a serious loss would take three months to rebuild but your coverage runs dry at 30 days, that gap lands on you. Confirm extra expense coverage in the same breath — the cost of a temporary location or rushed equipment to keep operating.
Gap 3: You may be underinsured without knowing it
Construction and material costs have climbed sharply over the last few years. If your building is still insured for what it cost to rebuild in 2021, you’re probably underinsured today — and that’s where the coinsurance clause bites.
Most commercial property policies require you to insure to a set percentage of replacement cost, often 80% or more. Fall below it and the insurer pays your claim only in proportion — even on a partial loss. A $200,000 fire on a building insured to half its real value doesn’t pay $200,000; it pays a fraction, and you cover the difference. An up-to-date replacement-cost valuation is the fix.
A few more worth a look
- Roof coverage — replacement cost vs. actual cash value. More policies now pay roofs at depreciated (ACV) value, which is a big difference on a hail claim.
- Wind/hail deductibles. Some policies carry a separate percentage deductible for wind and hail that runs far higher than your standard one.
- Equipment breakdown & spoilage. A storm-driven power surge or outage that kills a compressor — or spoils inventory — may need its own coverage.
The bottom line
None of these gaps show up on a normal day. They show up at the claim — the worst possible time to learn about them. A short coverage review before storm season closes them while it’s still cheap and easy.
That’s exactly the kind of review we do — see how Domham builds commercial insurance programs for Michigan businesses, or send us your current policy for a no-obligation second look.
Want a second set of eyes on your coverage before the next storm?
Send us your current policy — we’ll check for flood, business-interruption, and underinsurance gaps, and shop A-rated carriers to close them. No obligation, no pressure.