MN Commerce advises Minnesota homeowners to check insurance coverage for wind, hail limits
The Minnesota Department of Commerce is receiving a growing number of complaints after storms from Minnesotans regarding limitations in their homeowners’ insurance. In response, Commerce is issuing a consumer alert asking Minnesotans to review their current insurance policies and talk to their insurance agent to review their wind and hail damage coverage for any recent changes or modifications that may take effect at their next renewal.
Commerce also encourages Minnesotans to understand how much repairs may cost out of pocket and how to select a reputable, licensed contractor to do repair work on their home.
“We want to make sure Minnesota homeowners are aware of possible changes to their homeowners’ insurance coverage and not be surprised after they submit a claim,” said Commerce Deputy Commissioner of Insurance Julia Dreier. “In the past, homeowners’ insurance may have covered all of a policyholder’s costs to replace a roof or siding for even modest hail or wind damage, but that may have changed.”
Commerce has recorded a nearly 20 percent increase in homeowners insurance complaints since 2020. Many of those complaints are from homeowners concerned about coverage denials or unexpectedly high out-of-pocket costs after damage from wind or hailstorms. Some insurance carriers are now using policy language that eliminates coverage for wind and hail damage except when siding or shingles are punctured or torn and no longer serve as an effective water barrier.
Some insurance policies also now include a separate, higher deductible for hail and wind damage. For example, a homeowner might be required to pay a flat rate or 1 percent or more of the home’s replacement value before coverage kicks in. While such storm-specific deductibles are sometimes promoted as a way to save money on premiums, homeowners should evaluate those potential savings against the amount they may have to pay in repairs should their house be damaged in a storm.
“We advise homeowners to consider the math,” Dreier said. “One percent may sound affordable, but it could easily wind up being a significant expense and lead to sticker shock given the value of a typical home in Minnesota.”
Commerce and other insurance departments around the country are also seeing increases in complaints filed by persons who are not the insured. As more third parties become involved in insurance claims, Commerce recommends that homeowners familiarize themselves with how claims are submitted and how to find a reputable, licensed contractor to repair damage after storms. The Minnesota Department of Labor and Industry has helpful tips for hiring a contractor for storm repairs and avoiding contractors who are not licensed to do business in the state or who use high-pressure or deceptive sales tactics.
State law does not address policy exclusions for cosmetic damage from hail or wind. Changes to premium charges and coverage amounts or exclusions often occur at renewal. Commerce advises Minnesotans to study their own policies for changes since their last review and to ask their agent or insurer about policy coverage, exclusions, deductibles, and options. Standard homeowners policies do not cover flood damage, an increasing problem even in areas that are not within designated floodplains. More information about flood insurance options is available from FEMA at floodsmart.gov.
Similar trends in insurance have emerged across the country and are driven by increases in extreme weather and property damage due to a changing climate. According to the National Weather Service, Minnesota in 2020 recorded 147 storms with large hail, seventh nationwide for that year. In May of this year, Minnesota led the nation in severe weather with 568 events, according to the National Weather Service.
RESOURCES
- Department of Commerce guidance on settling a homeowners insurance claim
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Library of helpful articles from United Policyholders, a nonprofit organization providing information to insurance consumers in all 50 states
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Guidance from the Insurance Institute for Business and Home Safety for what to do after a damaging storm
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Homeowners who have insurance concerns or complaints can contact the Department of Commerce Consumer Services Center at consumer.protection@state.mn.us or by phone at 651-539-1600 or 800-657-3602
