Minnesota is now seeing derechos, haboobs — and higher insurance bills

Minnesota weather is becoming increasingly dangerous and expensive.

Natural disasters have increased in frequency in Minnesota over the past 25 years, according to data from weather agencies and the insurance industry. As a result, more Minnesotans are discovering that money-saving measures taken before someone hits your home or business are more important than ever.

An extremely hot day in the southern half of the state was followed by a night of hurricanes and thunderstorms on Tuesday. More than 100,000 households had a power failure and countless property and tree damage.

That paled against the derecho that swept the state on May 12. It created a fast-moving giant wall of dust called the Haboob in southwest Minnesota and more than a dozen tornadoes through the north-central portion of the state. One person died and damage has to date exceeded $1.3 billion, according to the National Oceanic and Atmospheric Administration.

“I’ve never seen anything like it before,” said Julie Rice, co-owner of Blade’s Store, a general store on a lake in Holmes City, southwest of Alexandria, that was nearly destroyed by the Derecho.

She was in the living quarters above the store when she noticed a 6 foot wall of water moving across the lake. She ran downstairs and locked an employee and her mother from a nearby cabin in the basement of the 8,000-square-foot store and home. As they took shelter, a straight wind peeled the roof off the building.

As the storm calmed, Rice emerged and saw a 100-year-old red elm tree fall on the cabin, a car and a boat. The tree also ripped open the sewage pipe and cut a hole in the storage building.

“My partner was driving home over the hill and saw the roof fly off,” Rice said. “As I stood there and looked at the tree, he told me the roof was gone too.”

For years, the Red Cross has been collecting nationwide data on the growing number and intensity of weather disasters. For the past year and so far this year, it has responded to a major weather event, such as last week’s Kentucky floods, on average every 10 days. A few years ago it was every 21 days.

NOAA recorded 22 weather events that caused more than $1 billion in damage in 2020, 20 in 2021 and nine so far this year.

In Minnesota, insurance providers describe a turning point in 1998, when three major storms caused more than $1 billion in annual damage for the first time. One of them was the outbreak of the March tornado that devastated St. Peter and other cities in southern Minnesota. It included an EF4 that remained grounded for 67 miles, the longest in state history.

“We’ve had a series of worst years since then,” said Mark Kulda, vice president of the Minnesota Insurance Association. “We now average billions of dollars in losses every few years.”

The state’s costliest storm brought wind and hail across Anoka County in 2017. Over the next two years, insurers covered more than $3 billion in losses.

As insurers’ payouts have increased, so have the premiums they charge Minnesotans. In 1998, the average Minnesota household paid $368 for home insurance. Now it’s a little over $1,400, Kulda said. If only the 1998 premium had kept pace with inflation, Minnesotans would only be paying $600 a year.

Here are some ways to prepare for and respond to disasters:

Make a plan, prepare a kit

The Red Cross teaches children in third grade and up how to prepare for a home fire or other emergency. His lessons are timeless and work both at home and in a company.

Step One: Once or twice a year, as a family or business group, take time to discuss what to do in an emergency. For a family, this includes how to regroup when disaster strikes while apart, for example with children at school and parents at work.

“What’s your plan to get back together? where will you go Consider things like pets,” said Tonia Teasley, regional CEO of the Red Cross in Minnesota and the Dakotas.

The Red Cross has several apps for smartphones, including one that alerts users to emergencies near them. It has an online rating tool for businesses called Ready Rating to help them prepare for disasters.

“It’s an effort we’re not that well known for,” Teasley said. “A company, organization, or school can go to the website, answer questions, and get a report that says, ‘Here’s your completed review,’ and ‘Here are things we suggest you work on.'”

The second step is to prepare an emergency kit. For families, that can mean water, non-perishable groceries, a flashlight, a battery-powered radio, and documents with important insurance and contact information.

For businesses, depending on the size, a kit may include these items as well as protective gear for employees.

keep insurance up to date

Once or twice a year, take the time to review property and catastrophe insurance with your insurance agent. Personal insurance plans must be updated to reflect changes in property and asset values. Commercial lines tend to work differently, with coverage and premiums based on business income.

“It’s important to have frequent conversations to make sure you have the right coverage,” Kulda said.

When Rice bought Blade’s Store six years ago, she retained the same insurance purchased from the previous owners who ran the store for 46 years.

“The only way we got insurance was we just took the same policy,” she said. “We have a building that was built in 1912 and expanded in the 1970s. There is no insurance at replacement value.”

Homeowners should take photos or videos of the possessions in a home or business at least once a year. Back up these images to a cloud service or memory stick somewhere off the property.

The same idea applies to copies of insurance documents. Kulda said one of the eye-opening lessons for Twin Cities insurers after the 2020 riots was that many companies lost important documents in fires.

“They had maybe $2 million in inventory, but it was all burned, the receipts were in the store, and they didn’t have photos,” he said. “Insurers had difficulty determining the correct amount of damage.”

If it happens, call your agent

After a disaster, call your insurance agent immediately to help you process the claim. Many providers have simplified the claims process with forms in an app or online.

Take notes and pictures to supplement your claim. Keep track of everything, especially receipts for goods and services, when your home or business is rebuilt.

Be patient with insurers. Payments don’t always come instantly, especially for businesses.

“In a large, complex commercial loss, insurers make multiple payments,” Kulda said. “Often business owners get that first check and it’s not as big as they thought it would be. You just have to keep the lines of communication open.”

After the derecho swept through Holmes City in May, Rice immediately called her insurance agent and was told he was retiring. A few weeks into the application process, the expert she was working with sent an email announcing his own resignation.

The building is “insured to the maximum that the insurance company was willing to pay,” Rice said. Coverage is limited to the current market value of the building, with depreciation based on age.

“To this day, we don’t know what the cost of rebuilding will be out of our pockets,” Rice said.

Think about your personal trauma

A new roof was built over the living quarters late last month. Completion of the interior will depend on insurance payouts, Rice said. She explores other financial aids.

“If we have to take out a mortgage to rebuild, there won’t be enough revenue generated from the deal to fund a mortgage payment,” she said. “That’s the scariest part for us.”

The Red Cross has mental health professionals who volunteer to help in the immediate aftermath of a disaster, Teasley said. But the stress can linger for years as disaster victims rebuild.

“It’s very traumatic to leave or lose your home or business,” she said.

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