If you run a business in Minneapolis, Duluth, or Rochester, your building and contents face real risks. From hail damage and frozen pipes to tornadoes and roof collapses, the weather alone makes commercial property insurance a must-have. Even if not legally required, most landlords, lenders, and client contracts will demand proof of protection.
This guide covers who needs coverage, what’s included, cost factors, and how to manage claims—so your business can stay protected year-round.
Who Needs This Coverage in Minnesota?
There is no statewide law that universally mandates all businesses to carry business property insurance. But coverage often becomes mandatory through other agreements or industry-specific licensing.
You likely need coverage if:
- You lease or finance your building—most landlords and banks require it
- Your industry has specific licensing or contract regulations that require coverage
- You store expensive equipment or inventory on site that needs protection
Workers’ Compensation Requirements
Minnesota law requires all employers to purchase workers’ compensation insurance to provide benefits for work-related injuries or obtain approval to self-insure. There is no minimum number of employees; even an employer with only one part-time employee generally must provide coverage. Failing to provide this mandatory coverage can lead to significant penalties.
Specific sector examples include:
Construction firms: While there isn’t a single statewide general liability mandate for all contractors in Minnesota, residential building contractors often need general liability insurance. Contractors also need workers’ compensation and builder’s risk policies for projects.
Commercial Pesticide Applicators: Required to meet financial responsibility requirements through liability insurance.
Medical offices: Hospitals and clinics carry high-value equipment and need comprehensive protection against fire, water damage, and mechanical breakdown.
Whether you own a coffee shop in St. Paul or a snow removal company in Bemidji, operating without essential property insurance can expose your business to massive financial risk.
What Does a Standard Policy Include?
Most policies protect more than just your physical building. A strong commercial property insurance plan will include:
Building coverage: Pays for direct physical damage to your owned commercial structure from covered perils like fire, hail, wind, vandalism, or burst pipes.
Contents coverage (Business Personal Property): Replaces damaged inventory, furniture, electronics, and machinery.
Business interruption insurance (also known as Business Income with Extra Expense): Replaces lost income and helps cover continuing operating expenses (like payroll and rent) if a covered peril shuts you down for repairs.
Add-ons (Endorsements) may include:
- Sewer backup and water backup protection: Covers damage from water that backs up through sewers or drains, or overflows from sumps
- Spoilage coverage: For refrigerated or perishable inventory
- Equipment breakdown: For HVAC, kitchen systems, industrial tools, or other machinery from sudden mechanical or electrical failures
For businesses operating in extreme cold, comprehensive coverage against winter-related perils is critical. This protects against roof collapse from snow load, frozen sprinkler systems, or broken water mains.
To fully protect your business, make sure you’re familiar with the 5 essential types of insurance most small businesses need
Top Risks and Claim Examples
Minnesota sees a wide range of property insurance claims each year. The most common causes of loss include:
Hail damage: Minneapolis, St. Cloud, and Mankato experience heavy hail annually. Policies may include percentage-based deductibles for hail or wind/hail damage.
Tornadoes: With Minnesota experiencing confirmed tornadoes annually, wind damage is common across the state.
Snow and ice: Flat-roof buildings face collapse risks during long winters due to heavy snow loads. This is one of the most frequent winter storm commercial property claims.
Flooding and thaw: Spring meltwater and heavy rainfall can cause flash floods in places like Stillwater and Moorhead. Standard commercial property policies exclude flood damage; separate flood insurance is needed.
Electrical and HVAC failures: Businesses in older buildings or those with aging systems are prone to power surges and mechanical failures, highlighting the need for Equipment Breakdown coverage.
Without the right policy, a frozen pipe or collapsed roof can halt operations for weeks—leaving you to pay out of pocket for repairs and lost income.
Cost Factors for Minnesota Commercial Property Insurance
Minnesota commercial property insurance costs vary based on multiple factors rather than fixed amounts:
Premiums vary based on:
- Property location: Businesses in the Twin Cities metro area often face different rates than those in rural towns due to population density, crime rates, and rebuilding costs
- Building age and condition: Older roofs or outdated systems generally lead to higher premiums
- Construction type: Buildings with fire-resistant materials typically get better rates than wood-frame structures
- Security systems: Installing burglar alarms, sprinklers, and fire suppression systems can lower rates
- Claim history: A clean history leads to savings
- Deductibles: Choosing higher deductibles reduces premiums but increases your out-of-pocket cost during a claim
Be aware of trends with commercial property insurance deductibles—especially separate wind/hail deductibles based on property value, which shift more of the initial risk to the policyholder.
Filing Claims in Minnesota: Laws and Timelines
The Minnesota Department of Commerce regulates commercial insurance practices. Here’s what to expect after a loss:
- File promptly: Most policies require notice within a reasonable timeframe
- Insurer response time: Claims must be acknowledged and necessary forms/instructions provided within required timeframes
- Investigation & Decision: Notice of acceptance or denial must be given within reasonable timeframes after receipt of notification
- Payment: If a claim is accepted and the amount agreed upon, payment must be issued promptly
- Appraisal process: If there’s a disagreement on the amount of the loss (not coverage), both sides may appoint appraisers and a neutral umpire to resolve it
What If You're Denied Coverage?
Some older properties, especially those in high-risk areas or with specific characteristics (e.g., poor maintenance), may be turned away by private insurers. In that case, you can apply through the Minnesota FAIR Plan (Fair Access to Insurance Requirements). This state-supported option provides basic property insurance coverage when you are unable to obtain it in the voluntary market.
While it serves as an insurer of last resort, you’ll likely pay higher premiums, and the coverage provided is typically “actual cash value” (not replacement cost) and may have more exclusions than voluntary market policies. However, it’s a vital safety net to avoid going uninsured.
Final Takeaways for Business Owners in Minnesota
Whether you run a main street shop in Red Wing or a distribution center in Bloomington, having the right commercial property insurance is key to survival.
Here’s what to do next:
- Review lease or loan documents for specific coverage clauses
- Check your wind and hail deductibles—they may have changed recently on many policies
- Consider bundling liability and property for potential cost savings, often through a Business Owner’s Policy
- If denied coverage by private carriers, explore the Minnesota FAIR Plan
- Get quotes from agents who understand Minnesota commercial property insurance risks
Don’t wait until snow caves in your roof or a hailstorm shatters your storefront windows. Start protecting your investment—before the next disaster hits.
Call our experts at 855-718-7552
