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As soon as a summer hail storm passes, roofing contractors arrive in Erik Neu's Woodbury neighborhood.
He has watched them go door-to-door offering free inspections, sometimes resulting in a new roof or siding covered by insurance. After a hailstorm a couple years ago, Neu's insurance company paid to replace his aluminum siding and asphalt roof. The same company had covered his home's last roof replacement a decade prior.
He was shocked.
"We weren't even thinking of getting the roof replaced," said Neu, 58. "Every house in our neighborhood has had its siding and roof replaced, fully covered."
After living in Indiana and Connecticut, Neu said it seems like it's more routine in Minnesota for insurance to cover roof replacements after hailstorms. He sought clarity on the issue from Curious Minnesota, the Star Tribune's reader-generated reporting project, and wondered whether this means Minnesota's home insurance premiums are higher than other states'.
"We pay for it one way or other," he added.
It doesn't appear that Minnesota's insurance companies treat roof replacements differently than other states, but roof replacements may be more noticeable lately because the state saw a spike in hail storms in 2022 and 2023.
Minnesotans do pay higher homeowners insurance premiums than residents in most other states, but state-by-state insurance comparisons are tricky because of the number of variables.
Insurance scaling back
Storms may have damaged lots of roofs lately, but the fully covered roof replacements Neu experienced are growing less common.
With more frequent extreme weather across the country, some insurance companies are no longer paying full replacement costs for roofs that were installed 10 or 15 years ago. Instead, they're paying the depreciated, actual cost of the roof instead of the replacement cost — or they're requiring a higher deductible to shift costs to homeowners, among other changes.
"Everybody thinks that when a storm comes, they're just going to have a brand new roof," said Aaron Cocking, CEO of the Insurance Federation of Minnesota, a trade group of insurers. "And you're starting to see a change in the market on that … There's still coverage, but we're paying for the actual cost value remaining on that roof."
The costliest storm year on record for Minnesota was 2022, according to the state Department of Commerce, with storms causing $6.3 billion in property damage. Then in August 2023, one hail and wind storm caused more than $1 billion in property damage in the Twin Cities and central Minnesota.
"That quickly adds up," Commerce Commissioner Grace Arnold said. "The climate is changing and that means that the risk for a particular homeowner … is changing. And rates are adjusting to account for that."
While Minnesota doesn't experience catastrophic hurricanes like southern states, or wildfires that tear across western states, severe thunderstorms can still cause widespread damage in the population-dense Twin Cities, Arnold said.
That's been particularly true lately. Minnesota ranked third in 2022 for states with the most hail events, preceded by Nebraska and Texas, according to the U.S. Department of Commerce. That year, Minnesota was the top state in the country for hail claims with State Farm, which cited nearly $800 million in damage.
But Pete Boulay, a climatologist at the State Climatology Office, said frequent hail in 2022 and 2023 were anomalies, and the state isn't seeing a pattern of more frequent hailstorms.
No 'free' roof
The amount homeowners are seeking in claims could also be going up because it's getting pricier to replace roofs and siding due to rising labor and supply costs.
The state has roughly 20% fewer roofers than it did several years ago, based on state data. And the average hail claim has almost doubled in the last decade to nearly $30,000, according to the Insurance Federation of Minnesota.
These costlier, more frequent replacements have contributed to higher premiums for insurance. In 2021, the average premium Minnesota homeowners paid for their coverage was $1,607, jumping by more than 50% since 2011 — far exceeding inflation.
Cocking said insurers have also taken a hit. Insurers paid out $1.92 in claims for every $1 paid by Minnesota homeowners in 2022, according to the American Property Casualty Insurance Association.
"Something's got to change," Cocking said, adding that insurers scaling back their coverage is in the interest of "looking out for all the policyholders who are paying higher premiums."
Insurers have added new exclusions to narrow coverage or boosted the amount of deductibles that homeowners have to pay on wind and hail damage claims, leaving more Minnesotans on the hook to pay possibly tens of thousands of dollars.
"This hollowing out of coverage by the insurance agencies is something we're seeing more and more nationwide," said Doug Heller at the Consumer Federation of America, a consumer advocacy group, who described the trend as unfair to financially vulnerable people. "It's going to create a class of people who can't afford to own a home in Minnesota because they can't get the coverage they need."
Some consumers aren't happy about it. Last year, the state Commerce Department saw a surge in complaints about denied claims or increasing out-of-pocket costs. The state agency fielded nearly 1,200 complaints about home insurance, double the number it received in 2020.
The Commerce Department investigates complaints and can take action if a state law has been violated, including requiring a company to refund policyholders. The department also reviews insurers' rates and can call a public hearing if they rise by 25% or more in a year. But Arnold said that hasn't happened, because the threat of a public hearing prompts a company to reduce prices.
For homeowners who can't afford the costly bill to replace their roof, Minnesota Housing offers loans — including forgivable loans for low-income owners — to pay for a roof or other home projects. The agency has generally seen an increase in homeowners receiving the loans over the past six years, especially in 2023.
Tips for homeowners
Arnold recommended that homeowners review their policy and ask their insurance agent what is not covered, to understand the limitations. Check what's changed in the policy before renewing it, and shop around to get multiple quotes.
"I think it's tempting to just purchase your insurance and pay it every year," Arnold said. "As premiums are increasing ... You can make smart choices about what you want covered and where you may be able to take on some risk by yourself."
To avoid scam businesses, homeowners should check a contractor's ratings and go to dli.mn.gov to see if the contractor is licensed by the state — or has a disciplinary record. State law also allows homeowners to cancel a roofing contract, with certain restrictions, if their insurance denies the claim.
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