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How Our Severe Storms Could Impact The Price Of Protecting Your Home

MINNEAPOLIS (WCCO) -- May was a rough month for many Minnesota families. A surge of severe storms left destruction and damage across the state.

As communities continue to clean up, we're looking into how these storms impact the price of protecting our homes.

Less than 25 years ago, fire losses were the largest cost for insurers in Minnesota. But now? It's storms.

Mark Kulda with the Insurance Federation of Minnesota says data shows the average Minnesota homeowners insurance premium in 1998 was $368, and in 2016 it was $1,400 -- which was above the national average of $1,249. Kulda says hail is the main culprit.

"It's gone up almost 400%, and we've gone from 35th to 14th, and we're only a few dollars away from being a top ten insurance premium state, and it's because of all the catastrophe losses we've seen, including the ones this month," Kulda said. "We've had three 'cats' just this month. We call them 'cats' when they're storms that are more than $25 million. We've had three of them just in this month and that's very unusual."

Let's say your home was damaged in the storms this week. Minnesota insurance companies can't penalize you for those weather-related losses, but what happens is we all pay those higher premiums over time. And experts say they're only going to get higher because of a few key factors.

"Inflation has gone up, and inflation affects everything including the cost to rebuild your home," Kulda said. "The second thing is really just the dramatic spike in home prices."

Home Repair, Storm Damage Repair
(credit: CBS)

Rising costs, coupled with more severe weather?

"That's gonna cause the premiums, I think, to spike pretty significantly in the next 24 months perhaps," he said.

How much? Kulda doesn't know. But he says installing things like hail-resistant shingles or a fire sprinkler system will strengthen your home and lower your premium.

Increasing your deductible will also lower your premium, if you're willing to take on more risks and cover smaller projects. That's something you'll want to do anyway because compounding claims can impact your coverage.

If you are looking for a contractor right now to fix something after the storms, Bao Vang with the Better Business Bureau of Minnesota and North Dakota wants you to stay alert to these red flags.

"Please watch out for anything that includes cash-only deals," Vang said. "You'll also want to avoid high-pressure sales. Anyone who is saying, again, 'Today's the only day, this is a limited-time deal.'"

The BBB says go with someone local, ask people you trust for recommendations, get the agreement in writing, and check out the company's history, ratings and reviews on the BBB website.

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