Top 6 Factors That Impact Home Insurance Rates in Iowa, Minnesota, and South Dakota

When shopping for home insurance, many homeowners wonder why their premiums might be higher than expected. While general factors like home value and credit score play a role, where you live can have a surprising impact on what you pay. 

Unique regional factors—such as the risk of tornadoes, severe winter storms, and flooding—can significantly influence home insurance in Iowa, Minnesota, and South Dakota. Understanding these factors can help you make smarter choices, find ways to reduce your premium, and ensure you have the right coverage.

In this article, we’ll explore six major factors that impact home insurance rates in these states served by Peoples Insurance and what you can do to protect your home and maybe save some money along the way.

 

1. Weathering the storm: Extreme weather & your insurance

Our homes are our sanctuaries, sheltering us against the elements. The weather we face can be unpredictable. This can disrupt our sense of calm and security, and it can also impact insurance rates.

 

Tornado alley's turbulent skies

In the heart of Tornado Alley, states like Iowa and South Dakota face a significant threat from tornadoes. These powerful storms, capable of causing extensive damage to homes—from roof tear-offs to shattered windows—are not just seasonal challenges but ongoing risks that can strike with little warning. Because of the devastation they may cause, insurance companies often reflect the risk of tornadoes in higher premiums for homeowners.

How to save:

• Strengthen Your Home: Investing in weather-resistant roofing and impact-resistant windows can mitigate damage and may help reduce your premiums.
• Document Your Belongings: Maintain a detailed inventory of your home's contents, using photos and videos to document. This step is crucial for claims processing post-disaster.
• Compare Insurance Offers: Review and compare insurance rates regularly to ensure you're getting the best coverage for your needs at the most competitive price.

Winter rollercoaster

Our winters are notorious for their severity. However, recent shifts toward even more erratic weather patterns, including unexpectedly mild winters followed by rapid snowmelts, pose new challenges. Such conditions have complicated risk assessments for insurers and, in many cases, resulted in higher insurance costs for homeowners.

How to save:

• Winter-Proof Your Home: Enhance your home's insulation, install sump pumps, and improve property drainage to combat the dual threats of extreme cold and potential flooding.
• Consider Additional Coverage: If your home is near bodies of water, flood insurance can be a vital addition to your policy, offering peace of mind against unexpected water damage.

2. When the water rises: Understanding flood risks

Flooding poses a persistent threat in many parts of our region, often causing extensive damage that surpasses other natural disasters in terms of cost and impact. Unlike typical weather events, flood damage is not covered under standard home insurance policies, making it crucial for homeowners to understand and manage their flood risk effectively.

 

Flood insurance: A necessity in high-risk areas

If your home is located in a designated high-risk flood zone, securing flood insurance is essential. This specialized coverage is separate from standard homeowner policies and addresses the unique damages caused by flooding. It's important to note that as extreme weather events become more frequent, flood insurance rates have trended upwards, reflecting the increased risk.

How to protect your home & lower costs:

• Utilize FEMA Flood Maps: Regularly check the latest updates on FEMA’s flood maps to assess your property's current flood risk.
• Elevate Essential Utilities: Consider elevating electrical panels, heating systems, and other critical utilities to protect them from water damage.
• Install a Sump Pump: Equip your home with a reliable sump pump, complete with a backup battery, to actively manage water levels during heavy rainfall.
• Adopt Flood-Proof Landscaping: Implement landscaping techniques that help divert water away from your property, such as grading your lawn away from your home and installing rain gardens.
• Build Barriers: Use sandbags and other barriers strategically to block potential floodwaters during impending storms.

Stay informed & prepared:

• Educational Resources: Visit our blog for more detailed guides on disaster preparedness, including tips on how to effectively use sandbags, the benefits of different flood-proofing technologies, and how to develop an emergency plan that includes evacuation routes and safety protocols.
• Regular Updates: Keeping abreast of changes in flood risk assessment and insurance requirements can help you make informed decisions about the necessary adjustments to your insurance coverage and protective measures at home.

3. The blueprint of safety: How construction choices affect your insurance rates

The construction materials and techniques used in your home play a significant role in determining your insurance premiums. Insurers assess the resilience of your home against natural disasters, fire, and other perils when setting rates. Understanding these factors can help you make informed decisions that enhance your home’s safety and potentially reduce your insurance costs.

Durable construction reduces risk

Investing in impact-resistant roofing and fire-resistant siding not only strengthens your home but can also lead to lower insurance premiums. These materials enhance your home’s ability to withstand adverse conditions, from severe weather to fire hazards, thereby reducing the likelihood of costly claims.

Energy efficiency & insurance:

Additionally, incorporating energy-efficient upgrades such as enhanced insulation or advanced HVAC systems not only cuts down on utility bills but may also attract discounts from insurers who value sustainability and reduced risk of fire or water damage associated with older systems.

 

The charm & challenge of older homes

While older homes carry a unique charm, they often pose increased risks due to aging infrastructure. Outdated electrical systems and old plumbing can become liabilities, leading to higher insurance costs due to the increased risk of fires or water damage.

Upgrading for safety & savings:

Upgrading these systems not only enhances safety but can also significantly lower insurance premiums. Modernizing your electrical wiring, replacing old plumbing, and installing modern heating systems are critical steps in safeguarding your home and achieving insurance savings.

 

Incentives for upgrading your home

Many states and insurance companies offer rebates and incentives for homeowners who undertake improvements that increase their home’s durability and safety. These financial incentives encourage the adoption of technologies and materials that reduce overall risks.

Check for available incentives:

Before embarking on home upgrades, it’s wise to check with your state government or insurance provider to learn about any available rebates or discounts. This can offset initial costs and maximize your investment return through both direct savings and reduced insurance premiums.

 

 

4. Safety first: Crime & property protection

The adage "location, location, location" not only applies to real estate values but also significantly influences your home insurance premiums. The level of crime in your neighborhood and the local response capabilities play key roles in determining these rates.

Urban vs. Rural: Balancing crime rates & response times

Living in urban areas often means facing higher property crime rates, which can lead to increased insurance premiums. Conversely, while rural areas may benefit from lower crime rates, they are also often characterized by longer emergency response times due to their remote locations, potentially increasing insurance costs due to higher risks of damage from delays in addressing incidents.

Regional crime statistics

In our region, statistics show that Minnesota experiences the highest rate of property crime, while South Dakota boasts the lowest. Iowa finds itself in between, reflecting a moderate risk level. These regional crime rates are key information for insurers to use when calculating the risk associated with insuring your home.

How to reduce your premiums through security enhancements

Enhancing your home's security can mitigate these risks and lower your insurance premiums. Consider the following measures:

• Security Systems: Installing a comprehensive security system can deter crime and may qualify you for discounts on your home insurance.
• Motion-Sensor Lighting: Adding motion-sensor lighting around your property can improve visibility and deter potential burglars.
• Smart Home Technology: Implementing smart home security devices, such as cameras and smart locks, provides real-time monitoring and control, increasing your home's safety and potentially lowering insurance costs.

5. Responding to emergencies: Fire protection

Rapid response times in an emergency are crucial, and the ability of firefighters to quickly reach your home significantly impacts your insurance premiums. This reflects the basic principle that quicker responses can mitigate damage, thereby reducing potential claims.

Proximity to fire services

Homes located near fire stations and fire hydrants are often eligible for lower insurance premiums due to the reduced risk of severe fire damage. These properties benefit from potentially faster emergency response times. Conversely, homes in rural areas that have less access to such services may face higher insurance costs due to the increased risk associated with delayed response times.

Strategies to enhance fire safety & reduce insurance costs

Taking proactive steps to reduce the risk of fire can not only save lives but also potentially decrease your insurance premiums:

• Smoke Alarms and Fire Extinguishers: Install smoke alarms on every floor and in key areas like kitchens and near bedrooms. Ensure you have adequate fire extinguishers accessible throughout your home, especially in high-risk areas.
• Fire-Resistant Materials: Utilize fire-resistant building materials for roofing, siding, and other structural elements. This can significantly reduce the risk of fire spreading.
• Fire-Resistant Landscaping: Opt for landscaping that reduces the risk of fire, such as using gravel or stone near your home instead of flammable materials like mulch or pine straw.
• Accessibility for Firefighters: Ensure that your property is easily accessible to emergency services. This includes clearly marked house numbers, unobstructed driveways, and adequate water supply if you live in a more isolated area.

6. Additional pressures on premiums: Rising replacement costs & reinsurance

Beyond weather, construction, and location, there are two other key forces currently driving up home insurance premiums in Iowa, Minnesota, and South Dakota—both of which are especially relevant in today’s market.

1. Higher Costs to Replace Damaged Property

Since 2020, the cost to repair or replace damaged portions of a home has risen sharply. Whether due to inflation, supply chain disruptions, or labor shortages, the expense of restoring homes after a claim has increased significantly. Insurers now face much larger payouts when damage occurs, and as a result, they’ve had to adjust premiums upward to keep pace with these higher claims costs.

2. The Rising Cost of Reinsurance for Insurance Companies

Insurance companies themselves purchase coverage—called reinsurance—to help protect against catastrophic losses. However, just like homeowners, these companies are facing higher deductibles and dramatically increased costs for reinsurance. This added financial pressure means they’re absorbing more risk and must pass some of that cost on to policyholders, particularly in weather-vulnerable regions like the Midwest.

These two industry-level trends have become major drivers of increased premiums, and while they are behind the scenes for most consumers, understanding them provides crucial context when rates change—even if you haven’t filed a claim yourself.

 

Keeping insurance affordable: Your action plan

While certain aspects of home insurance rates are influenced by external factors, there are several actions you can take to manage and even reduce your premiums. By being proactive and informed, you can significantly influence your insurance costs.

Proactive home upgrades

• Strengthen Your Home: Focus on upgrading critical areas like your roofing and electrical systems and utilize fire-resistant materials to enhance safety and reduce risk.
• Enhance Security: Invest in advanced security systems and smart home technology to deter crime and possibly lower your premiums.

Assess & address risks

• Understand Your Risks: Evaluate your home’s vulnerability to flood and fire. Implement measures to mitigate these risks effectively.
• Shop Smart: Compare insurance rates to ensure you are getting the best deal. Consider all options, including those from established providers like Peoples Insurance.

Incentives & savings

• Seek Out Incentives: Explore rebates and discounts available for making safety improvements to your home.
• Engage with Programs: Investigate state programs that might offer tax credits, grants, or rebates for enhancing home safety.

Engaging with insurance professionals

• Review Your Policy: Regularly assess if your current insurance adequately covers your needs without overpaying.
• Consult Your Agent: Discuss potential discounts for security features, home upgrades, or risk mitigation efforts you have implemented.
  

Peoples Insurance agents offer local expertise and a long history in the industry. We can help you determine your homeowners or renters' insurance needs and match those needs to the right kinds of coverage. Give us a call, request a quote online, or visit one of our seven locations in Rock Valley, Lester, Sioux Center, Akron, Sheldon, Hawarden, IA; and Jasper, MN. Our friendly insurance agents are always happy to answer your questions and help you with the application process. Don’t forget, you can also save money by bundling your home and auto insurance together.