One of the most important purchases you can make to protect your home and possessions is home insurance. In Minnesota, average rates for home insurance are a little more pricey, which given lower household income rates can make premiums more difficult to pay for. However, in a state lying in Tornado Alley, suffering from wildfires and with many areas at risk of flooding, home insurance remains a useful protection for properties. To find the best Minnesota home insurance, it’s good to first understand what the average home policy looks like—its price, what it covers, and what it needs to cover to give your home all the protection it needs.
- Fun fact: Minnesota has over 11,842 lakes that are 10 acres or more in size
Average Rates in Minnesota
Minnesota home insurance is relatively pricey. Occupying 14th place on the Insurance Information Institute’s ranking of average state premiums, its $1,348 annual premiums are more expensive than 72% of the nation. States with similar prices include Arkansas, with premiums of $1,373, and New York, with premiums of $1,309.
Contrasting with Minnesota’s relatively high home insurance, renters’ insurance in Minnesota is on average cheaper than all but two states in the United States. Its premiums of $140 ($40 below the national average) exceed only the average premiums in Wisconsin ($134 average premiums) and South Dakota ($123 premiums). That’s good news for Minnesotan renters!
Minnesota Legal Insurance Requirements
As with most states, the purchase of home insurance in Minnesota is not a legal requirement, but rather a contractual one. An overwhelming majority of mortgages and lenders will require you to purchase home insurance as a condition of a loan, and they may force you onto a home insurance plan if you don’t choose a plan yourself. However, Minnesota law regulates home insurance, forbidding insurance companies from adjusting rates based solely on:
- The geography of the area your home is located in
- The age of a home
- Different zip code areas within the same town
- The home having been previously insured under the Minnesota FAIR plan (the most basic home insurance, available for homes that don’t qualify for standard market home insurance)
- A homeowner having been previously denied insurance coverage for the property (exempting reasons listed in Minnesota Statute §65A.01.
This is good news, especially for homeowners with older homes or who had previous difficulties in finding home insurance. You’re given more of a blank slate once you apply for coverage again with a new insurance company.
But, what exactly can you expect to be covered by Minnesota home insurance? All insurance is offered in various “forms,” which cover against damaging events names in your policy. Different forms are available for homeowners, renters, condominium owners, and owners of older homes, but the following are the insurance types typically included in each policy:
- Coverage A: Dwelling, which is based on the replacement cost of a home. Insurance companies are forbidden by law from insuring a home for more than its replacement value, and the typical coverage is 80% of the replacement cost.
- Coverage B: Other Structures, which is usually set at 10% of coverage A, the “face” amount of your policy. This protects fencing, sheds, unattached garages, and other structures on your property not attached to your main dwelling.
- Coverage C: Personal Property. The contents of your home (like furniture and appliances) can be insured as well as the outside, usually for 50% of the amount of Coverage A. An insurance company may however set limits on highly valuable items of property, like antiques, art, and jewelry. If you desire more coverage than the limits your insurance will allow, you can obtain personal property endorsements to insure these items separately.
Now, the initial percentage of coverage your insurance company offers for Coverage B and C isn’t set in stone. In fact, Minnesota law requires that insurance companies give you the option to purchase higher percentage limits, as well as rate credit for purchasing lower than standard limits.
- Coverage D: Loss of Use. If you need to live outside of your home for a time while it’s being repaired, this will help pay for expenses to maintain your normal standard of living.
- Liability coverage: Standard insurance limits are at $100,000—liability coverage applies in cases when you are sued for damage to another’s property due to negligence.
- Umbrella policy: This is an optional add-on for liability, that comes into play once you’ve maxed out your liability coverage, and also covers liability for cases of personal injury.
Common Risk Factors in Minnesota
Minnesota’s inland location protects it from damages related to hurricanes. Not only that, but the state has some of the lowest seismic activity in the nation – meaning there’s little threat of an earthquake damaging your home. Minnesota isn’t immune to natural disasters though, and the Minnesota Department of Administration identifies the following as the greatest risk to properties.
- Wind: Minnesota lies along the northern edge of Tornado Alley, with tornadoes touching down on the state on average 28 times every year. This can result in numerous damages to the home, including lifting it from its foundation, loss of roofing, loss of porches, sheds, and fencing, damage from objects thrown into a building, and even complete destruction. Straight line winds are also a threat in Minnesota, causing much of the same damages and over a wider area. Most standard home insurance protects homes from wind damage—the risk posed by tornadoes may partially explain high home insurance costs in Minnesota.
- Snow and Ice: Particularly in older homes, the weight from accumulated snow and ice can damage roofing and cause collapse. Additionally, cold weather can pose a threat to plumbing systems as water expands inside of piping, threatening rupture. Both damage from weight of snow and damage to plumbing from accidental rupture is covered by standard home insurance, but you can mitigate your risk by regularly clearing your roof of snow during winter months.
- Fire: Minnesota suffers from many wildfires, which can be spread easily in windy conditions. According to the Insurance Information Institute, in 2019 1,021 wildfires afflicted the state, burning 5,862 acres of land. However, fire insurance is included within even the most basic of Minnesota home insurance plans.
- Floods: Floods are the most significant risk to Minnesota homes that are NOT protected by home insurance. Particularly in Minnesota’s river valleys, snow melt and rain can cause flooding that submerges and destroys properties. Flood insurance must be purchased separately through the National Flood Insurance Program—it’s particularly important to consider this insurance if you live in a floodplain with 100 or 500 year floods.
Insurance Demographics/Statistics in Minnesota
The price of your home insurance policy can be affected by a multitude of variables, ranging from the age of your home and its distance from a fire station to whether you’re a retiree. Since insurance companies are motivated to increase the price of their policies for those they consider at “high risk” of filing an insurance claim, it can be helpful to understand how the following information could influence the home insurance offered to you.
Your Home’s Value
This is perhaps the most important factor to consider—after all, the value of your home is the measure upon which most of the rest of your insurance relies. Insurance companies determine the value of a home based either on its replacement cost or its actual cash value. Replacement cost is the amount of money it takes to rebuild a copy of your home using similar materials and with current construction labor costs. Actual cash value, on the other hand, reflects more the cost to replace items after damage from wear and tear or age.
Minnesota’s $263,708 home values somewhat exceed the national average of $248,857. When shopping for home insurance, it’s important to remember that the sale price of your home is not equivalent to its replacement cost or actual cash value. When you buy or sell a home on the market, included within the price is the cost of the land your dwelling is located on. Land is not a factor when it comes to repairing or replacing your home’s structure with home insurance, so your home’s value must be evaluated separately from its sale price.
Local Crime Rates
Areas with high property crime rates can be considered “high risk” by home insurance companies and face higher premiums as a result of their location. Minnesota’s 2018 property crime rate (sans auto theft) was 1.81%, as reported by the FBI Uniform Crime Reporting Program. This rate is somewhat lower than the national 1.97% property crime rate, and may result in savings if you purchase home insurance in Minnesota.
Your Income and Education
Good credit is often advantageous when purchasing home insurance—and characteristics like a college education and a high income to a degree predict good credit that can offer you lower premium rates or discounts when buying home insurance. Minnesota has somewhat higher average incomes and education rates when compared to the national average. The Census Bureau’s 2018 report put the average home income in Minnesota at $70,315 (compared with $62,179 nationally), and the percentage of people over 25 who received at least a bachelor’s degree at 35.4% (compared to 32.06% nationally).
Where To Purchase Home Insurance in Minnesota
Now that you understand more about average home insurance policies in Minnesota, you can delve into the specifics of hunting for an insurance plan. Agilrates.com can give you all the information you need, with accurate quotes from top insurers in your zip code. Whether you are getting a policy for a new home or simply shopping around as your policy renews, by comparing many different companies you can get the ideal home insurance. According to the Pulse Whitepaper from iii.org, only 44% of homeowners compare prices of different insurers at renewal time, and only 17% do so online. That means more than half of all homeowners are leaving money on the table at renewal time. Use AgileRates.com’s online form to get matched with a local agent, get free quotes, and shop around!