Heavy snow melt has Minnesota homeowners wondering: Should I own flood insurance?

Worry about spring flooding is now an annual rite in Minnesota. And the heavy snowfall this year is raising the risks.

"The forecast is for the likelihood of major flooding," said Sven Sundgaard, a meteorologist with Minnesota Public Radio. According to the National Weather Service, the biggest risks are for the Mississippi River from St. Paul downstream.

While concerns about rising waters should set off alarms about the need for flood insurance, only a small number of people actually do it, said James Sink, regional flood insurance liaison with the Federal Emergency Management Agency (FEMA).

Only about 7,500 policies are in force across Minnesota, covering fewer than 0.3% of residential structures, he said.

Here are some things to consider.

Do I need flood insurance?

Most insurance experts say you should consider it. Standard homeowners and hazard insurance policies do not cover flood damage.

When major flooding hit California in January, few homeowners had flood insurance. Some had canceled them during the drought. So they were left to finance their own cleanups.

The National Flood Insurance Program (NFIP), managed by FEMA, covers communities that work with NFIP to adopt and enforce floodplain management regulations. In Minnesota, 96% of the population live in these communities, said Ceil Strauss, state flood plain manager for the Minnesota Department of Natural Resources.

The program partners with more than 50 insurance agencies.

If you are not in one of those communities or want an alternative to the FEMA-managed coverage, private flood insurance is another option. The private policies might have different coverage options or higher policy limits.

Also important to know: Flood insurance policies are not effective until 30 days after being purchased, although if you just closed on a property purchase or refinancing, the policy can be effective immediately.

While talk of increased flood risks might spark some to quickly look into insurance, policyholders should look beyond a single season, said Dawn Janes-Bartley, CEO of Wayzata-based Minnesota Insurance Group Inc.

"It should be something that they're thinking about long term," said Janes-Bartley.

How much does it cost?

For nonresidential structures and businesses, the average NFIP flood insurance premium is $2,236 in Minnesota, Sink said. The residential/single-family home average premium in the state is around $761.

That cost needs to be weighed against the average flood insurance claim in Minnesota, which is $15,000, Sink said.

FEMA statistics show that just one inch of floodwater can cause up to $25,000 of damage.

"Flooding is the nation's most common and costly natural disaster," Sink said.

Insurance discounts are available for policyholders who implement flood mitigation efforts, he said. Costs also can be controlled by selecting different coverage and deductible levels.

Also, private policies can have cheaper options, depending on coverage levels, Janes-Bartley said.

To estimate the amount of coverage you want from a policy, Janes-Bartley suggests assembling a replacement cost estimate for property and materials that could be potentially damaged.

Sink said that people may decide that they don't think flood insurance is essential or that they don't want the additional expense.

"For some people flood insurance is a luxury," Sink said. "A lot of it has to do with how people perceive risk."

Am I eligible for federal flood insurance?

Some people have the misperception that they aren't eligible to buy flood insurance.

"There is no requirement [you must] live in a flood plain," said Sink.

What exactly is covered?

Flood insurance covers the building and the contents of the property separately. Policy owners can buy coverage for one or both, according to the DNR.

Each structure on your property requires a separate flood insurance policy. Portable storage units are not covered by flood insurance, nor are items that are standing outside in your yard.

Basement coverage is limited to only things that are essential for the structure such as a furnace or a water heater. It does not cover all the stuff stashed there for storage.

For homeowners NFIP flood insurance covers up to $250,000 for buildings and $100,000 for contents. Businesses can be insured up to $500,000 for both the building and contents.

One other point when considering coverage amount is that flood insurance covers the cash value of the items, not the replacement costs.

Does flood insurance only cover homeowners?

In addition to homeowners and business owners, renters also can buy flood insurance.

"This is really important for renters. Landlords are not required to disclose flood risks to their tenants," Sink said.

Have costs increased with inflation?

Strauss acknowledged that Minnesotans do not carry much flood insurance.

"Compared to other states we're very low per-capita. The numbers have been going down in the last few years," said Strauss.

One factor could be that flood insurance rates have increased in recent years.

"We have had people dropping policies because they're not as cheap as they used to be. The rates are higher if you're more at risk," Strauss said.

FEMA implemented Risk Rating 2.0 in 2021 which adjusted the rates. FEMA statistics show that in Minnesota 29% of policyholders saw a decrease in their premiums. The agency's data showed that 64% of policyholders saw increases of $10 per month or less.

At the same time, Strauss said, the state has done a good job of lowering flood risks.

"I think part of it is we have had good regulations in place for over 50 years. Most of our newer [building] stock is built outside of the higher-risk areas or they're elevated more. Per-capita we don't have as many buildings at risk," said Strauss.

But with the changing climate, flooding risks are no longer limited to the springtime, Strauss said.

"It's not just the spring flooding. We are seeing more of the big storms throughout the year, and they're extending into more seasons," said Strauss.

DNR statistics shows that approximately 50% of flood damage occurs outside of mapped flood zones, often caused by stormwater flooding.

What should you do if you need to file a claim?

If the worst case happens and you are hit with flooding, contact your insurance agent immediately. An insurance adjuster will then assess the flood damage either in-person or remotely.

Taking photos and video of the damage is an important part of filing a claim. Take photos and videos before throwing anything away. Record the serial numbers for large appliances. Receipts showing the original cost of items can be helpful if you still have those.

Flood insurance does not cover mold damage. Policyholders should start cleaning to prevent the growth and spread of mold.

If a building's water, electrical or HVAC systems have been damaged you can start initiating the process for repairs but talk to your insurance adjuster before signing any contracts or agreements.

How are people preparing this year?

In Stillwater along the St. Croix River, a crew of volunteers has been piling sandbags to create a berm as a line of defense against what could be historic flooding this year.

In the river community of Winona, the city's flood watchers are wary but also prepared for the season.

"There's projections that it could get serious this year," said Brian DeFrang, director of public works for the city of Winona, which sits on the Mississippi River.

"We're pretty well protected by our levee, but there's a lot that goes into the levee protection as far as pumping stations and things like that," said DeFrang.

The biggest unknown remains whether the state still gets significantly more snow or rainfall and what temperature trends will mean for the pace of melting snow.

"The snowpack that we have across the state contains way more water than a normal large snowpack. When that melts there's going to be an abnormally large surge of water into our rivers," said Sundgaard, the meteorologist.

If snow melts quickly, that could increase the risk for flooding, he said. "A lot of this will depend on what happens in the next few weeks."