Homeowners Insurance in Arizona

Arizona homeowners desperately need insurance due to the harsh climate and eventful weather patterns that can damage homes and property. Arizona is a state of contradictions. Half of the state is semi-arid, one-third is arid, and the rest has a humid climate, making the weather unpredictable and, at times, dangerous. Residents deal with earthquakes, wildfires, and unforgiving winter storms. Since 1953, the federal government has declared 68 disasters in Arizona. The rate of disasters per 1 million people is 9.07.

Along with damage from earthquakes and harsh winter storms, homeowners in Arizona must also deal with frozen pipes, ice and snow weight damage, and roof and window damage from howling, whipping winds, and debris flying. Wildfires are also a major concern that can cause devastating harm.

No state requires homeowners insurance, but in Arizona, if you buy a house with a mortgage, your lender will require that you purchase some and keep your policy active for the duration of the loan. Lenders require substantial limits to ensure that the house will be restored to its original condition if a disaster occurs so the owner and lender do not incur any losses. Arizona has wild, unpredictable weather, which means more claims. Check with your lender to determine the limits you need before buying a policy. Insurers also recommend that Arizona residents add flood insurance to their protection.

As of 2023, the average cost of homeowners insurance nationwide was $1,754/year. The average price for $300,000 of coverage in Arizona is $2,490, which is higher than the national average, but it hits the mid-range regarding low-to-high costs across the U.S.

Homeowners insurance coverage types vary by state. In Arizona, you can get the following types. Some are add-on coverages, but others are standard coverage you will see with any policy regardless of the carrier. The types available in Arizona include:

Climate change has drastically impacted the homeowners insurance market and increased rates. In the past five years, rates have spiked 34%. More natural disasters and more perils equal more claims and higher premiums. A study by Realtor.com showed that a whopping 44.8% of U.S. homes experience at least one catastrophic event due to inclement weather. Arizona experienced a rate increase of 52.9% from 2018 to 2023.

Arizona has a mixed-bag climate; residents deal with earthquakes, wildfires, and extreme winter storms. In 2022, the state saw 1,432 wildfires, destroying 124,165 acres of land. From 1980 to 2023, Arizona had 33 billion-dollar disasters. The average cost of a wildfire is $3.3 billion. In 2020, 6% of insured homes filed at least one claim.

Many things affect the cost of homeowners insurance. The number one factor is where you live. Things that affect the cost of homeowners insurance include:

With wildfires a considerable factor in Arizona, homeowners must do all they can to save on insurance. Shop around when looking for the best rates. Some other ways to save are raising your deductible, installing a security system, keeping your credit score high, bundling your policies, opting in for automatic withdrawal, and reinforcing your home with fire-resistant materials to avoid fire and smoke damage.

Homeowners insurance is a policy you purchase that pays to repair or rebuild your home after a disaster or qualifying event, such as a fire, storm, theft, or tree falling on the house. Policies have different types of coverage and usually include dwelling, personal property, liability, and medical payments. A standard policy may not cover some expensive items like jewelry and furs. To obtain coverage, shop around and find an agent you are comfortable with. They can help you decide how much coverage you need. They may do a physical inspection of the property before quoting you rates. Once you pay the first year upfront, you will pay the remaining payments monthly through your mortgage escrow or an annual fee.

Although homeowners insurance can be pricey, many providers offer discounts that can help lower your premiums. The most common discounts offered include:

• Security System, Smoke Alarms, and Sprinkler Systems: The more secure your house is, the less risk it poses, and the more you could save on rates.
• Claims Free: You could save a lot on insurance if you have a clean claims history.
• Senior Discounts: Some carriers offer discounts for seniors, military personnel, and veterans.
• Bundling: Bundle multiple policies with the same insurer, and they should give you a discount for being a loyal customer.
• Materials Discount: If you upgrade your roof or windows to withstand disasters better, you could get a discount on your rates.
• Eliminate Risk: Get rid of any additional risks to your home, and you could also save on homeowners insurance.

Common Rates Offer by Homeowners Insurance Firms

Rates vary widely due to many factors and between insurance firms. Many carriers offer better rates for new construction homes because everything is brand new, with modern, safer systems and materials that are up to code. Your homeowner profile will also factor in things like your credit score, if you bundle coverages, and if you allow automatic withdrawal. All of these things can affect your rates. New construction coverage is, on average, $80/month. With companies like State Farm, you can expect rates of $710 for a $100,000 home. For $250,000 of coverage, you will pay $1,315. Many homeowners save up to 40% with a new construction home.

The top 10 insurance firms in the state and your average savings for new homeowners discounts are as follows:

Older homes cost more to insure. Upgrades, fixes, and remodeling projects can strengthen your house and impact your home insurance. Renovations that reduce risk will help lower your premiums. Some projects will increase your rates, while others may reduce them or have a neutral effect.

Home Improvements That Increase Home Insurance Rates

Some home improvement projects that increase your home insurance are:

• High-end Upgrades: Re-doing your kitchen with granite countertops and expensive appliances and fixtures will increase the value of your home, but your insurance will also go up.
• Solar Panels: Installing solar panels is a great way to save money on electricity and is more environmentally friendly. However, because it costs more to replace them and your roof, your home insurance rates will go up.
• Replace Siding: Replacing the siding on your house can drastically improve its appearance and durability, making it less vulnerable to storms. It might lower your home insurance, but since it may also increase the value of your home, it could increase your rates or have no effect at all.

Home Improvements That Lower Your Home Insurance Rates

Some home improvements that should lower your home insurance premiums include:

• Roof Replacement: Replacing your roof with sturdier materials can lower your rates and the risk of a claim.
• Upgraded Electrical: Old wiring increases the risk of a fire. If you have your entire home rewired with modern electrical wiring and a new panel, your house will be safer, and your premiums could be lower.
• Storm-Resistant Materials: If you fortify your home with stronger windows, hurricane shutters, and roof reinforcements, you could lower your home insurance rates.

Homeowners insurance covers the repair of your home due to damage from a qualifying event. If your furnace breaks, electricity shorts out, or plumbing fails (not due to any covered event), you must pay for those repairs yourself. They are not covered under your policy.

If you significantly renovate your home and do not increase your policy limits, you may not get enough money to restore it to its current condition if the house is damaged. You must speak to your insurance agent before any renovation to ask how it will impact your insurance. You should also have them come out and do a physical inspection afterward to assess the upgrades so you can adjust your limits accordingly.

Renters insurance is like homeowners insurance for renters, apartments, and condos. Unlike home insurance, it has no dwelling coverage (the owner's policy covers that). A typical renters policy covers personal property, liability, and additional living expenses. However, there are limits, and it will only cover a certain amount. If you have expensive art, jewelry, and electronics, you may be unable to claim the total amount to replace them.

Renters insurance prices are based on location (the safer the area, the lower the rates), coverage limits (that you choose), and the number of units (the more units, the lower the price).

In some locations, renters insurance costs as little as $5. However, rates vary depending on the provider and other factors. In Arizona, a typical renter pays $156/year or $13/month for home insurance. Suburban rates tend to be much lower, whereas urban rates are higher.

Condo insurance is slightly different than homeowners. Because condo owners live in a building with other owners, and a master policy covers the dwelling and is usually structured to restore the unit to its original condition. That might mean using materials from when it was first built. Most condo owners have upgraded their homes with newer materials and refined finishes. Condo insurance pays the extra amount needed to restore everything from the "walls-in" to its current condition. So, if you put in a new kitchen and your condo is destroyed in a fire, the master policy will pay to rebuild it, and then your condo insurance will replace the kitchen. Condo liability insurance only covers accidents inside the home, not outside, that would fall to the condo association's master policy.

Renters insurance does not repair or replace any part of the unit. Condo insurance does cover the entire interior of your condo, along with personal property, liability, and loss of use.

Condo insurance typically covers dwelling coverage (only walls-in) to restore the condo to normal. It also covers personal belongings, liability, and loss of use.

Condo insurance can cost as little as $40 a month in some areas. In Arizona, the average cost is $710/year, which is $59/month, slightly higher than the national average of $43/month.

You can save on your condo insurance by choosing a higher deductible, bundling it with other insurances, installing smart/security devices, shopping for discounts, and remaining claims-free for as long as possible.

The home insurance market in Arizona is getting tighter and tighter. Over the past ten years, losses have doubled. People who live in wooded areas north and east of Phoenix are finding it impossible to find coverage due to the many wildfires in the state. Wildfires are strangling the homeowners insurance market in that area, and many providers have stopped offering coverage completely.

Home insurance is regulated by state agencies rather than federal. In Arizona, the agency in charge of ensuring professional and fair practices is the Arizona Department of Insurance located at 2910 N. 44th Street, Ste. 210, (2nd Floor), Phoenix, AZ 85018-7269

Although no federal agency regulates insurance companies, FEMA (Federal Emergency Management Agency) manages the National Flood Insurance Program (NFIP) through a network of 50 providers across the U.S.

Since most homeowners insurance does not cover floods, this supplemental coverage can repair damage and replace items after a flood. It can cover the building and/or your personal belongings, depending on your options. This program is available to homeowners, renters, and businesses. Learn more about the program on FEMA's website.