Whether you own residential or commercial property, property insurance is a must. Like many other aspects of property ownership, it’s been in the process of big changes, and it can be difficult and confusing to keep up.

To help you navigate this vital part of property ownership, we recently sat down with our insurance agent, Greg Miller of Miller-Hartwig Insurance, to discuss the changing property insurance landscape, as well as what’s on the horizon for Minnesota property insurance in 2025 and beyond.

Greg, please tell us a little about who you are, what you do, and your relationship with APPRO Development and CERRON Commercial Properties

Miller-Hartwig is an independent insurance agency in Minnesota. We have about 40 agents around Minnesota, but we are also licensed and appointed in several other states. We have quite a few states that we do business in, but I'd say 98% of our business is in Minnesota, with quite a bit of business in Wisconsin, too.

I’m the agent specifically for APPRO and CERRON, who our company has worked with for around 30 years. When my parents owned the agency, they insured APPRO, and my dad, Dick Miller, is good friends with Jack Matasosky (APPRO founder and CERRON owner and broker). They go back a long time. 

I've been in the industry now for 20-some years, and when my dad retired, I inherited the APPRO and CERRON account. They're one of our best customers, and when we need to have work done, we call them as well.

Can you outline some of the changes we’re seeing with property insurance in Minnesota?

One of the big changes we're seeing is that a lot of insurance companies are changing their policy forms. The weather in Minnesota has been brutally bad the last two years, and insurance companies have lost a ton of money here.

Many people don't realize how bad a state we are for hail, but we are a terrible state for both wind and hail. We're usually in the top five states for catastrophic losses for insurance companies—usually number three, behind Florida and California.

So what we've seen is that homeowners insurance has gotten very expensive because insurance companies aren't making any money. When I started 20 years ago, we used to see hail damage once every four or five years, and now we're seeing it every year. Not this year—this year's been okay. But the two years before this, for every dollar insurance companies took in, they paid out about $1.25 in claims, and they have to be below 54 cents to make a profit. So they've lost millions here.

What key factors are driving the recent changes and increases in property insurance premiums in Minnesota?

So that is the main factor—insurance companies are losing money. We want the insurance companies to make money, believe it or not. We want them to be profitable, because when they're profitable, that's when rates come down, or at least stabilize. When they lose money, rates go up.

In Minnesota, the most the state will allow is a 24.9% rate increase on home insurance. And that is what most of the carriers we work with have taken the last two years.

The other thing that's happening is that some companies like Secura and Main Street have stopped writing personal lines altogether. They've pulled out of that whole area—they will only write commercial now. That tells you they don't think there is any money to be made in the personal line space.

Due to this, a ton of policies were non-renewed, and we had to find new ones for those customers. We work with about 20 companies here, and most of them are not even accepting new business at the moment. Nobody wants to be the last company taking business in a state, because then they get all of it. That has precipitated a lot of them shutting down, and those that are still open are very, very picky about what they'll take. 

How is climate change—specifically the increase in extreme weather events—impacting property insurance policies and coverage in Minnesota?

So climate change is obviously a big contributor to these changes—in Minnesota and across the country. We’re seeing more significant weather events, and for a longer season. For example, we get hail earlier in the year now than we used to, and we get hail later in the year than we used to. We used to be out of the woods with hail by September, and now we still get it in October.

Between weather events and inflation, it’s been kind of a perfect storm. And then we have contractors, too, that are a little bit merciless about damage, and with the fights between contractors and adjusters, the cost of it all has gotten crazy.

Are there specific regions or property types within Minnesota that are seeing more significant insurance changes? If so, why?

Townhome associations are very difficult to find coverage for, because no company wants to cover that much roof exposure. So most companies are not writing townhome associations. 

Those companies that used to—American Family, for example, used to be a big player — are getting out and non-renewing them all. So buildings like townhomes and apartment buildings are very difficult to find policies for because they're typically not profitable for the insurance companies. 

Basically anything with a pitched asphalt roof is very difficult to cover. Anything with an older roof is almost impossible. Once a roof hits 15-16 years old, that's when people are more likely to call when the hail falls. Those shingles don't stand up to hail as well.

Companies typically want to see a roof built within the last 10 years. Most are not accepting buildings with roofs older than that because of the prevalence of claims.

In addition, some companies are really not interested in writing business in the metro area just because of the number of roofs we have, so they’re looking for more business out of the metro area.

What should Minnesota property owners expect in terms of coverage limitations or exclusions as the insurance landscape shifts?

Overall, coverages are going to shift towards the homeowner having more skin in the game with their claims. 

I think a lot of companies are going to switch to actual cash value coverage on roofs older than 10 years. Many companies will do what’s called a roof schedule: the first couple of years you’ll have replacement cost coverage, and after that your coverage will drop down by a certain percentage each year (so 95% of the roof one year, 90% of the roof the next, etc). The kind of coverage you're going to have will be right on your policy form, so pay attention to that.

Insurance companies are increasing their deductibles as well. They're starting to require anywhere from $2,500 deductibles to wind-hail percentage deductibles. 

A lot of people don't understand the percentage deductible. They think maybe it's a percentage of the claim, but actually it’s a percentage of the house coverage. The bigger house you have, the bigger that deductible is going to be, and it will go up every year. So if you have a $750,000 house with a 1% wind-hail deductible, your wind-hail deductible is going to be $7,500. We don't like percentage deductibles and try not to sell them, but there could be a point here where we won’t have a choice. 

How can property owners proactively manage their risks to help mitigate insurance costs or avoid higher premiums?

The number one thing on my recommendation list would be don't file small claims. Insurance is really intended for catastrophes. Everyone’s idea of a small claim is different, of course, but as an example, if your sink overflows and you've got a couple thousand dollars worth of damage, it may not be worth filing that claim.

Keep in mind that if you have two non-weather claims in Minnesota in a three-year span, insurance companies can legally non-renew you. You don't want to give them a reason to non-renew you, because not only are they raising rates, but they are also re-underwriting everything. They want to get rid of some of the business they have. 

The second thing you can do is to choose higher deductibles. You probably won’t have a choice, anyway, but I would go with higher deductibles.

And then, of course, do what you can to prevent claims. For example, there are water sensors you can get for your basement that go off if the water rises. Getting a security system can help you avoid break-in claims. I would say the water sensor is even more important than the alarm system, though. Water is a nasty claim. We don't see that many break-ins, but we get a boatload of water claims (when sump pumps fail, etc.).

What changes can property owners expect when renewing their policies, and what are some key questions they should ask their insurance agents?

They should confirm that they have replacement cost coverage. A lot of companies are changing their forms, like I've been saying. And they're sending out notices, but a lot of people don't read them because frankly, they’re boring and confusing. 

Being an independent agent is fun in one way, but challenging in another. One of the big challenges is that we work with so many insurance companies and they are always making changes. 

We have literally so many policies renewing and so many companies changing things that oftentimes we can't keep up. So I actually have a note on my email signature to remind people to read what their insurance companies send them to stay up-to-date on what they’re doing. If they talk with their agent as well, they can ask if they still have replacement costs on their roof and see if there's anything else they can be doing.

We also recommend that you bundle everything. Now is not the time to have your auto insurance with Progressive and your homeowners insurance with Farmers, or something like that. Now's the time to put everything together in one place. 

Not only will you get a discount when you bundle, but also, insurance companies don't even want to write monoline home policies. They won't write those policies new, so you want to make it look as appetizing as possible to the insurance carrier to get the coverage you need. So try to bundle everything together.

What’s on the horizon for property insurance in Minnesota?

We've been waiting for the industry to make some of the changes that they're making on the forms, and I think they finally had enough and are starting to make those changes happen. The state has to approve the changes, though, and it will take time to get the changes approved. 

Once those changes go through, then it takes a year to get things in place because you have to roll it on to all the policies. But I think these changes should help insurance companies be profitable again.

When I started in business I could write a homeowner's policy for a middle class home for $400 a year, and now our average premiums are $2,500 to $3,000—it's gotten really, really expensive. I don't ever see it going back down to $400 a year, but it would be nice if it dropped a little bit, or at least stayed the same for a couple of years.

What advice would you give to Minnesota property owners considering changes to their current insurance plans or shopping for new coverage?

Make sure you're comparing apples to apples. Say you currently have a policy where you're grandfathered into replacement cost coverage on your roof and your premium is $3,000, and you’re considering a move to a different company where your premium is only $2,000, but you’d only have actual cash value coverage on the roof. In that scenario, it's not worth moving because if you do, you may end up paying $10,000 on a roof claim. 

So make sure you understand the differences between the two types of policies. And if you’re moving to a new company, make sure you know what’s in the new policy. No one likes that kind of surprise when they file a claim.

We're an independent agency, so we have 20 different options that we can look through. Obviously, I'm biased, but I do think shopping with an independent agent is beneficial. Whereas State Farm or Farmers can give you one option, we can shop several to find the best fit. And in three or four years, if the rate goes crazy, we can move you to a different company. So working with an independent agent is the way to go.

I’d also say to just ride this out, because I do think it will get better here next year. Luckily this year has been a pretty good year for the insurance companies, at least in Minnesota. Other states have been a nightmare, but Minnesota somehow has avoided most of the weather this year, and that'll help improve things for next year. 

We hope you found this helpful in navigating your changing property insurance needs and what to expect in 2025.

At APPRO Development and CERRON Commercial Properties, we strive to bring you relevant, helpful insights to inform your real estate decisions. If you’re considering a commercial real estate purchase or sale in the near future, we’d love to assist you. Contact us today to discuss your goals and learn how our team can help you reach them.