Michigan MCL 559.154 and 559.156: Condo Insurance Bylaws

Quick Answer

The Michigan Condominium Act does not contain a detailed insurance code. It does two things: MCL 559.154(3) and (4) require every set of condominium bylaws to direct what happens after casualty damage and to treat liability costs and insurance proceeds as administration expenditures and receipts, and MCL 559.156(c) lets bylaws provide for "insuring the co-owners against risks affecting the condominium project."

So the insurance rules for your community mostly live in your recorded bylaws, not in the statute. Read the bylaws first.

At a Glance

What the Law Says

MCL 559.154(3): destruction

"The bylaws shall contain specific provisions directing the courses of action to be taken in the event of partial or complete destruction of the building or buildings in the project." The statute itself does not list the courses of action. It requires the bylaws to say what they are.

MCL 559.154(4): liability and insurance proceeds

The bylaws "shall provide that expenditures affecting the administration of the project shall include costs incurred in the satisfaction of any liability arising within, caused by, or connected with, the common elements or the administration of the condominium project." They must also provide that receipts "shall include all sums received as the proceeds of, or pursuant to, a policy of insurance securing the interest of the co-owners against liabilities or losses arising within, caused by, or connected with the common elements or the administration of the condominium project."

MCL 559.156(c): insuring co-owners

Section 56 says "the bylaws may contain provisions" including "(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." The word is "may," so this is permitted, not required.

Related provisions

• MCL 559.154(2) treats personal property taxes on the project's tangible personal property as administration expenses.
• MCL 559.154(6) requires an indemnification clause for the board, with 10 days' notice to co-owners before payment, excluding "willful and wanton misconduct" and "gross negligence."

We read these sections in full. We did not find in them any rule that requires a particular type of policy (for example a master policy covering the whole building), any minimum coverage amount, or any rule on who insures interior improvements. Note that MCL 559.213, which an earlier inventory listed with these provisions, is titled "Financing" and concerns a developer not requiring a buyer to use one specific financial institution. It is not an insurance provision.

What This Means in Practice

For boards

Our reading: because the statute delegates the details to the bylaws, the board's first step after a loss is the casualty and insurance article of the recorded bylaws, not the Act. That article should tell you who must insure what, how proceeds are used, and what happens in a partial or complete loss. If the article is silent or unclear, ask counsel before acting.

The statute treats insurance proceeds as association "receipts" for policies securing co-owners against liabilities or losses connected with the common elements or administration. Our reading is that this language matters for accounting: liability costs go on the expenditure side and the proceeds on the receipts side of the books the association must keep under MCL 559.154(1). The statute does not tell the board how to allocate a specific claim between association and owner coverage.

For owners

Section 56(c) preserves each co-owner's right to insure the unit "on his own account and for his own benefit." The statute does not say what an owner's policy should cover or whether the bylaws can require owners to carry certain coverage. Ask the board for the casualty article of the bylaws, and ask your insurance agent which parts of your unit your policy should cover given the bylaws.

What the law does not say

• It does not require a single-entity or master policy and does not describe how responsibility for interior items is divided. Those are bylaw questions.
• It does not set a deductible rule or say who pays the deductible. Check the bylaws.
• It does not set minimum coverage amounts.
• It does not state what the "courses of action" must be after destruction.
• We did not review court decisions on insurance disputes or any regulation by the state insurance regulator.

Timeline

Related Michigan Law

• MCL 559.154: mandatory bylaw provisions and ADR
• MCL 559.209: developer tort liability
• Michigan board member liability and D&O insurance
• MCL 559.205: reserve fund requirement
• MCL 450.2541: director duties and liability
• Michigan Condominium Act 2026: guide for boards

Board Checklist

• Read the casualty and insurance article of your recorded bylaws and keep a summary for new directors.
• Confirm the bylaws contain the specific courses of action required by MCL 559.154(3).
• Ask your insurance agent to map each policy to the bylaws' division of responsibility.
• Review the indemnification clause and its 10-day notice requirement.
• Remind owners in writing that they may insure their own units, and what the bylaws say about coverage expectations.
• Record insurance proceeds and liability costs in the books consistently with the statute's expenditure and receipts language.
• Ask counsel before the board decides how to handle a partial or complete loss.

Frequently Asked Questions

Does Michigan law require a condo association to carry a master insurance policy?

The provisions we read do not say so. The Act requires bylaws to address casualty and liability and permits insurance provisions. Check your bylaws.

What must the bylaws say about damage to the buildings?

MCL 559.154(3) requires "specific provisions directing the courses of action to be taken in the event of partial or complete destruction" of the buildings. The statute does not list the actions.

Can owners buy their own insurance?

Yes. Section 56(c) says bylaw insurance provisions are "without prejudice to the right of each co-owner to insure" his or her unit on his or her own account.

How are insurance proceeds treated?

MCL 559.154(4) says receipts affecting administration include sums received under a policy securing co-owners' interests against liabilities or losses connected with the common elements or administration.

Does the statute say who pays the deductible?

Not in the sections we read. The bylaws control unless other law applies.

Is board indemnification related to insurance?

MCL 559.154(6) requires an indemnification clause with 10 days' notice to co-owners and exclusions for willful and wanton misconduct and gross negligence. It is a bylaw term, separate from insurance coverage.

Does this apply to HOAs that are not condominiums?

These provisions are in the Condominium Act, so they apply to condominium projects.

Where This Comes From

This page is based on the text of MCL 559.154, 559.156 and 559.213 as published on the Michigan Legislature website (MCL 559.154), current through PA 114 of 2026. We did not review court decisions or insurance regulation.

How APM Helps

Association Property Managers manages condominium and HOA communities across Michigan from our East Lansing office, with flat, published pricing. See our Michigan service area, browse every Michigan state-law guide, or request a free proposal. Laws and documents differ by community, and we review your master deed and bylaws when we build your proposal.

Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed Michigan attorney before acting.