MINNEAPOLIS — Joan Hasper and Floyd Grabiel have each lived at the Windwood Condominium for a number of years. But this last year, their monthly homeowner's association fees shot up.
"The last year has been hell, to be honest with you," Hasper said. "Mine, when I moved in, was about $500-$600 a month. Now they're over $1100."
"My assessment went up about 35%," Grabiel said. "Fortunately I'm able to pay it. Some of our longer-term residents might not be able to pay as easily as I have been."
It's happening to people all over Minnesota. And the reason, quite simply, is hail.
Kate Grutzmacher, President of Cities Management, says the cost of master insurance policies, which cover the roofs and exteriors of homes within HOAs, have increased exponentially.
"I mean, in some cases we're seeing 300, 400, 500% increases, which is just amazing," she said.
The impact those folks feel full-force is now starting to reach owners of single-family homes as well.
"The the day of having the insurance company come out and you know, pay for your entire roof and maybe only have $1,000 deductible, I think those days have come and gone," said Eric Skarnes, president of Insurance Warehouse.
Skarnes is considered by many in the industry to be one of foremost insurance experts in the state. He says that until 2008, Minnesota was one of the most profitable states in the country for insurance companies. But the rising number of yearly hail storms since than has now made Minnesota one of the five least profitable states.
According to the National Centers for Environmental Information, Minnesota had an average of 237 hail reports each year from 2000 to 2003. But from 2020 to 2023, there were an average of 363 hail reports each year.
"Insurance companies are losing money," Skarnes said. "We've seen carriers in Minnesota, for every dollar they collect in insurance premiums on the space, they've paid out roughly a $1.40 in claims."
The insurance companies, Skarnes said, are now closing that gap by raising premiums, raising deductibles, and adding exclusions that make the homeowner pay a larger portion of a roof replacement after a future damaging storm.
"A lot of them have gotten clever with their language and their deductible structure so that. Either the deductible is large enough or there's exclusions in the policy that would eliminate a large portion of the roof coverage," Skarnes said.
Those who haven't experienced changes yet likely will when their policy renews, Skarnes said.
And the situation with condos and townhomes is more complicated and even worse.
Homeowners pay for those "master policies" covering the roofs and siding through their HOA dues. But nearly all the major companies offering master policies have pulled out of Minnesota.
That forces HOA's like the one Joan and Floyd are a part of to take whatever policy they can get -- at up to 400% of the cost.
The HOA board received just one company willing to cover them.
"We were stuck," Grabiel said.
Skarnes recommends everyone asks their insurance agent to explain what their new private policy covers before the next hail storm comes. And despite all this gloom, Skarnes is actually optimistic that stability is in the horizon.
"My hope is that we've kind of hit this plateau of how awful it can get. I think rates have gotten high enough. I think carriers have reduced their exposure enough with the wind, hail, deductibles and some of the exclusions that they've put into policies. And so I do think that carriers will start to be profitable again in Minnesota," Skarnes said.