Rising Severe Weather Events Drive Home Insurance Costs in Minnesota
The frequency and severity of extreme weather events in Minnesota have led to substantial increases in home insurance rates across the state. According to Insurify’s home insurance report, the average annual cost of home insurance in Minnesota surged by 20% in 2024 to $3,524. Moreover, Insurify projects that Minnesota will experience one of the fastest rate hikes in 2025, with another double-digit increase of 15% likely.
The Impact of Severe Weather on Insurance Costs
The 2010s saw Minnesota face 11 billion-dollar disasters, averaging about one per year, as reported by the National Centers for Environmental Information (NCEI). However, in the last five years, the state has been hit by 23 billion-dollar events, averaging nearly five per year. In 2024 alone, Minnesota experienced 190 severe hail events, with 26 of those incidents involving hail 2 inches or larger in diameter. A notable July storm brought hail up to 4 inches in diameter near Monticello and Big Lake, according to the National Oceanic and Atmospheric Administration (NOAA).
While wildfires and hurricanes often dominate headlines, hail can be particularly devastating for homeowners. Wind-driven hail can cause significant damage to siding, windows, roofs, and can severely injure people and animals. Areas prone to severe weather damage typically face higher home insurance rates due to the increased likelihood of homeowners filing claims. Roof damage, in particular, can drive up rates since home insurance policies cover roofs under the main dwelling coverage amount.
“Roof claims are going through the roof, pun intended,” remarked Daniel Lucas, carrier relations manager at Insurify. “Some insurers have even stopped writing policies for homes with a roof over 10 years old. That’s so difficult to swallow given that roofs are meant to last 20, 30, 50 years.”
Minnesota’s FAIR Plan: A Safety Net for Homeowners
When home insurers cease selling new policies in high-risk areas, homeowners are left without coverage or alternative options. The Minnesota Fair Access to Insurance Requirements (FAIR) Plan serves as a vital resource for homeowners unable to secure coverage in the standard market. The mission of Minnesota’s FAIR Plan is to “provide basic and affordable property insurance” to homeowners “without regard for environmental hazards,” provided the property is reasonably maintained. FAIR Plan coverage is designed to be comparable to basic coverage in the standard insurance market.
Although FAIR Plan homeowners insurance can be more expensive than standard policies due to its high-risk nature, rates in Minnesota were moderate in 2023. During that year, the FAIR Plan issued 3,773 policies, primarily for residential properties, at an average annual cost of $960 per policy, according to the Property Insurance Plans Service Office.
