How to deal with a natural disaster in Minnesota

Minnesota’s climate is becoming increasingly dangerous and costly.

Natural disasters have increased in frequency in Minnesota over the past 25 years, according to data from weather agencies and the insurance industry. As a result, more Minnesotans are discovering that taking money-saving steps before you hit your home or business is 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 thunderstorms. More than 100,000 homes lost power and countless people suffered property and tree damage.

That paled in the face of the derecho that hit the state on May 12. It produced a giant wall of dust called a haboob in southwestern Minnesota and more than a dozen tornadoes in north central Minnesota. According to the National Oceanic and Atmospheric Administration, one person has died and damage has exceeded $1.3 billion so far.

“It was like nothing I had ever seen before,” said Julie Rice, co-owner of Blade’s Store, a lakeside general store in Holmes City, southwest of Alexandria, which was almost destroyed by the derecho.

She was in the living quarters above the store when she noticed a 6ft wall of water crossing the lake. She ran downstairs and gathered an employee and her mother from a nearby shack in the basement of the store and the 8,000 square foot house. As they took shelter, a straight-line wind tore the roof off the building.

When the storm subsided, Rice emerged and saw a 100-year-old slippery elm tree toppled over the cabin, a car, and a boat. The tree also tore up the sewer line and drilled a hole in the store building.

“My partner was driving up the hill to get home and he saw the roof fly off,” Rice said. “As I stood there staring at the tree, he told me the roof was also gone.”

At the national level, 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, every 10 days on average. A few years ago it was every 21 days.

NOAA has 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 companies describe a turning point in 1998, when three major storms caused more than $1 billion in annual damage for the first time. One of them was the March tornado outbreak that devastated St. Pierre and other towns 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 series of worst years,” said Mark Kulda, vice president of the Minnesota Insurance Federation. “We average multi-billion dollar losses every two years now.”

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 damage.

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

Here are some ways to prepare for and respond to disasters:

Make a plan, prepare a kit

The Red Cross teaches children as young as third grade to plan for a home fire or other emergency. His teachings are timeless and work just as well at home as in business.

Step One: Take time once or twice a year as a family or business group to discuss what to do in an emergency. For a family, this includes how to come together in the event of a disaster while separated, with children at school and parents at work for example.

“What’s your plan to get back together? Where are you going to go? Consider things like pets,” said Tonia Teasley, regional CEO of the Red Cross in Minnesota and the Dakotas.

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

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

The second step is to prepare an emergency kit. For families, this may mean water, non-perishable food, a flashlight, battery-powered radio, and paperwork with essential insurance and contact information.

For businesses, depending on the size, a kit may include these items as well as protective gear for employees.

Keep insurance up to date

Take the time once or twice a year to review property and loss coverage with your insurance agent. Personal insurance plans need to be updated to account for changes in the value of property and assets. Business lines tend to operate differently, with coverage and premiums based on business income.

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

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

“The only way to get insurance was to take over the same policy,” she said. “We have a building that was built in 1912 and extended in the 1970s. There is no insurance for its replacement value.”

Homeowners should take photos or videos of home or business assets at least once a year. Make backups of these images in a cloud service or on a USB drive that is somewhere off the property.

The same idea goes for copies of insurance documents. Kulda said one of the telling lessons for insurers in the Twin Cities after the 2020 civil unrest was that many businesses lost important documents in fires.

“They had maybe $2 million in inventory, but it was all burnt, the receipts were at the store, and they had no pictures,” he said. “Insurers have had difficulty finding the right claim amount.”

When this happens, call your agent

After a disaster, immediately call your insurance agent, who will help you start a claim. Many providers have simplified the claims process with in-app or online forms.

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

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

“In a large and complex commercial claim, insurers make multiple payments,” Kulda said. “A lot of times business owners get that first check and it’s not as important as they thought. They just need to keep the lines of communication open.”

After the derecho swept through Holmes City in May, Rice immediately called his insurance agent and learned he had retired. A few weeks into the claims process, the adjuster she worked with sent an email announcing her own retirement.

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

“As of today, we don’t know how much of the reconstruction expense will be out of pocket,” Rice said.

Pay attention to your personal trauma

A new roof was constructed atop the living quarters late last month. Completion of the interior will depend on insurance payments, Rice said. She is exploring other financial aid.

“If we have to take out a mortgage to rebuild, there’s not enough revenue generated from 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 rebuild.

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

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