MINNESOTA, USA — After being hit by two back-to-back hurricanes, the southeast region of the United States is facing the monumental task of figuring out insurance coverage for home and business owners who saw damage during the storms.
Could those insurance claims affect costs in other states? Say, Minnesota or Wisconsin?
Aaron Cocking with the Insurance Federation of Minnesota says what happens in one state cannot directly raise rates in another.
"Our insurance is regulated at the state level. Most states' rating laws require rates to be actuarily justified. They require that actuarial justification on a state-by-state basis.”
But Cocking says the hurricanes down south could have an indirect impact on insurance costs here in the Midwest.
He says the demand for lumber and shingles could skyrocket in the coming months, driving up prices nationwide.
"The roofing company is only going to be able to crank out a certain amount of shingles in a day, and if there is a huge demand for them down in Florida, the cost that it's going to cost us here in Minnesota obviously is going to be greater, too,” Cocking says.
Another key takeaway from the situation down south is the importance of reading your insurance policies and knowing what is actually covered.
Roberta Gibbons is an insurance agent with Dyste Williams.
She says a lot of the damage from the hurricanes was caused by flooding.
"Flood insurance coverage is generally excluded in all homeowner's insurance policies,” Gibbons explains.
That means a lot of the damage from the recent hurricanes isn’t covered by standard homeowner’s insurance policies.
"The sad reality is that with flood insurance, there are a lot of communities where people don't have flood insurance because they don't think it's something that is ever going to happen to them,” Gibbons explains.
The Insurance Information Institute (III) tracks flood insurance coverage in every county across the United States.
According to III, in most counties in Florida, less than 10% of the residents own flood insurance.
In Asheville, North Carolina, one of the hardest-hit areas for flooding after Hurricane Helene, III says less than 1% of homeowners are covered for flooding.
"That's going to leave a lot of people without the coverage they were expecting. That's why it's critical for people to review their policies to make sure they are properly protected.”
Cocking says here in Minnesota, roughly 9,000 homes are protected by flood insurance, which is a small fraction of the total homes owned in Minnesota.
According to III, in most Minnesota counties, less than 1% of homes are protected by flood insurance.
"We saw that unfortunately in southern Minnesota earlier this year, the floods that ravaged down there, and that was the thing we saw at that point. People just never expect it's going to happen to them,” Cocking says.