You’re not alone if you’ve noticed that your homeowners’ insurance premiums are going up. The national home insurance industry is going through big changes, which have come with hikes in insurance rates. 

As rates continue to increase (some people are seeing 30-50% increases), your options for carriers are also decreasing. In Minnesota, it is becoming harder and harder to place new businesses or remarket accounts due to new underwriting guidelines that are restricting new business and reducing coverages. New underwriting guidelines also restrict new businesses from entering the industry, which can make finding a quality policy even more difficult. The same is also happening in some auto insurance situations, too. 

Other changes we’re seeing are mandatory wind/hail deductibles of $2500 and $5000, cosmetic damage exclusions, Actual Cash Value roof settlements, matching exclusions, and more. 

So what exactly is going on? What are your options moving forward? Let’s break it down. 

Why Are Insurance Rates So High?

First, it’s important to understand that the weather is partly to blame for the increased costs of home insurance policies, including in Minnesota. For example, both wind and hail claims have been increasing massively, throwing the “usual” system out of whack. 

This is going hand-in-hand with large increases in inflation, which has driven up the cost of materials and labor.

At the same time, insurance companies have been consistently reporting large losses. In the last few years alone, they have had to tighten their belts to keep loss ratios down, per industry regulations. To do this, one of the only levers they have to pull is the size of home insurance premiums. 

No one wants a budget in the negative, and that goes double for large companies! To prevent bankruptcy, these homeowner insurance companies are increasing their rates to cover the differences. If you are a homeowner in Minnesota, I can pretty much guarantee that your rates are going to go up, no matter who your insurance agent is.

Each state has its own regulations when it comes to the rules of the industry. In Minnesota, the companies are feeling restrained to keep both reserves and ratios in line.

How Are Insurance Companies Slashing Benefits?

In addition to raising rates, homeowner insurance policyholders are seeing some other changes. These are ways the insurance companies are trying to keep their books in the black. Extra costs may pop up, even if you don’t change companies, as you may notice plans or details you previously had included may no longer exist.

When your policy comes up for renewal, keep an eye on the following changes that your insurance company likely will have made: 

• Actual cash value payouts (instead of replacement cost)
• Deductible minimums starting at $5,000
• Exclusions for “cosmetic” damages 
  • For example, metal roofs/casings need to be “functionally impaired” to be covered
• Tightened restrictions on full roof replacements
• Matching exclusions, which means your carrier is not obligated to match non-damaged materials when replacing damaged materials.

In short, your homeowner’s insurance company is trying to reduce the number of claims they receive or have to pay out on. 

Roof Damage Claims: Actual Cash Value vs. Replacement Cost

One of the biggest reductions in benefits that you’ll see is that payouts have changed from a replacement cost to an actual cash value when it comes to roof damage. This means that the policy will only pay the depreciated value of the roof, not the full cost to replace it. 

If you experience roof damage, your policy might only pay 50-70% of the actual cost of the repair, and the rest will be your responsibility. 

Can You Maintain Your Current Coverage & Rates?

To be blunt, no. 

Not everyone is eligible for a rewritten homeowners insurance policy. This means you may have to stay with your current company and policy. In order to be eligible, you would probably have to have had zero claims in the last five years, including NO weather-related claims!

Benefits of Calling Rehm Insurance

There’s one bright spot in all of this! Unlike many insurance sales professionals, I am an independent agent. This means I am not tied to one single insurance company, and instead can peruse all available policies that may be open to you. I will find the absolute best price that I can, and I am more than happy to comb through your policy details to tell you exactly what is (and isn’t) covered, both now and in the case of your renewal. 

If you’re trying to save money in other areas, to make up for increased homeowners insurance rates, I can also take a look at the other types of policies you may have. Perhaps we can find better savings on your auto, life, or supplemental policies! To make up for the rising costs of homeowners’ insurance, it is sometimes best to seek savings elsewhere to put toward these rising costs.

No matter how you spin it, I will absolutely do my very best for you. Call (507) 304-7017 or book an appointment online to see what I can do for you!