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

Minnesota weather is getting more dangerous and expensive.

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

On Tuesday, an extremely hot day in the southern half of the state was followed by a night of hurricane-force winds and thundery showers. More than 100,000 households lost power and untold numbers suffered property and tree damage.

This paled in comparison to the derecho that hit the state on May 12. It produced a fast-moving giant wall of dust called a habub in southwestern Minnesota and more than a dozen tornadoes up through the north-central part of the state. One person has died and the damage has exceeded $1.3 billion so far, according to the National Oceanic and Atmospheric Administration.

“It was like nothing I’ve ever seen,” said Julie Rice, co-owner of Blade’s Store, a department 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 pond. She ran downstairs and grabbed an employee and her mother from a nearby cabin in the basement of the store and 8,000-square-foot home. While they were taking shelter, a straight-line wind peeled off the roof of the building.

When the storm subsided, Rice went outside to find a 100-year-old red elm tree toppled over on top of a cabin, a car and a boat. The tree also ruptured the sewer line and put a hole in the store building.

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

Nationally, the Red Cross has been collecting data on the increasing number and intensity of weather disasters for years. Last year and so far this year, it has responded to a major weather event, like last week’s flooding in Kentucky, 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 damages for the first time. One of them was the tornado outbreak in March that devastated St. Peter and other cities in south-central Minnesota. It included an EF4 that stayed on the ground for 67 miles, the most in state history.

“Since then, we’ve had a string of worst years,” Mark Kulda, vice president of the Insurance Federation of Minnesota. “Now we’re averaging multibillion-dollar losses every few years.”

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

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

Here are some ways to prepare and respond to disasters:

Make a plan, prepare a kit

The Red Cross teaches third graders to plan for a home fire or other emergency. His lessons are timeless and work at home as well as in business.

Step One: Take some time once or twice a year as a family or business group to discuss what to do in case of an emergency. For a family, this includes how to regroup if disaster strikes while you are apart, with children at school and parents at work, for example.

“What is your plan to get back together? Where will you go? Take into consideration things like pets,” said Tonya Teasley, regional CEO of the Minnesota and Dakota Red Cross.

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

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

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

For businesses, depending on the size, the kit may include these items plus protective equipment for employees.

Keep your insurance up to date

Take time once or twice a year to review property and casualty coverage with your insurance agent. Personal insurance plans must be updated to account for changes in property and asset values. Commercial lines typically work differently, with coverage and premiums based on business income.

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

When Rice bought Blade’s Store six years ago, she kept the same insurance purchased by the previous owners, who operated the store for 46 years.

“The only way we could get insurance was if we just took out the same policy,” she said. “We have a building built in 1912 and added on in 1970. No replacement value insurance.”

Property owners must take pictures or videos of the property in their home or business at least once a year. Back up these images to a cloud service or off-site storage.

The same idea applies to copies of insurance documents. Kulda said one of the striking lessons for insurers in the Twin Cities after the 2020 civil unrest is that many businesses have lost important documents in fires.

“They may have had $2 million in inventory, but it’s all burned, the receipts are in the store and they have no pictures,” he said. “Insurers had a hard time finding the exact amount of damages.”

When this happens, call your agent

After a disaster, call your insurance agent immediately to help you get started on your claim. Many providers have made the claims process easier with in-app or online forms.

Take notes and photos to support your claim. Keep track of everything, especially receipts for goods and services, while your home or business recovers.

Be patient with insurers. Payments don’t always come all at once, especially for businesses.

“In a large, complex commercial claim, 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. They just need to keep the lines of communication open.”

After the derecho hit Holmes City in May, Rice immediately called his insurance agent and learned that he was retiring. A few weeks after the claim process began, the adjuster she worked with sent an email announcing his own retirement.

The building was “insured to the maximum amount that the insurance company was willing to cover,” Rice said. Coverage is limited to the actual cash value of the building, with depreciation based on its age.

“As of today, we don’t know what our out-of-pocket costs are going to be to restore this,” Rice said.

Consider your personal trauma

At the end of last month, a new roof was built on the living quarters. Finishing the interior will depend on insurance payments, Rice said. She is looking for other financial help.

“If we have to go get a mortgage to rebuild, there’s not enough revenue generated by the store to support a mortgage payment,” she said. “That’s the scariest part for us.

The Red Cross has mental health professionals who volunteer to help immediately after a disaster, Teasley said. But the stress can last for years as disaster victims recover.

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