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Homeowner’s Insurance Premiums in Arizona

Purchasing insurance is rarely ever an enjoyable task. But with the joys of personal homeownership come such unpleasant responsibilities. You’ll need to protect your investment, and the best way to do that is with a homeowners insurance policy. Below, we’ll explain the ins and outs of homeowners insurance in Arizona. Our goal is to help new homeowners navigate the complicated process of purchasing their coverage as easy as possible.

Arizona homeowners insurance companies will typically offer one of three different policies to customers: the Basic Policy, the Broad Policy, and the Special Policy. Naturally, the special policy covers more than the broad policy, which covers more than the basic policy. They do differentiate between “all risk” and “named peril” policies. It’s important to know the difference between them all, and how it could affect your payout for potential claims. Below are some recommended coverage amounts for a $300,000 Arizona home insured with a broad policy:
 

Type of Coverage Coverage Amount
Replacement Cost (Dwelling) $300,000
Replacement Cost (Contents) $225,000
Personal Liability $100,000
Medical Expense $1,000
Deductible $500

For a basic idea of how much coverage you can expect from your policy, pay close attention to the table above. You should also have a candid discussion with your insurance agent about how much coverage your home really needs, how much they can provide, and what (if any) supplemental coverage you may need to purchase in order to protect against future disasters.

Average Homeowners Insurance Rates in Arizona Legend: Average Rate Phoenix Tucson Mesa Glendale Chandler 200 400 600 800 1000 1200 1400 1600 $1629 $1220 $1365 $1653 $1199

 
Obviously, cities with higher property values tend to have higher insurance rates overall. But keep in mind that these are estimates for average quotes across the region as a hole. In a city like Aurora, for example, your required premium payment could be as low as $732 from a company like AIG, or as high as $2,792 from the Farmers Insurance Exchange. That’s over $2,000 difference between companies for insuring property within the same city. That’s why it’s so important to shop around; not only can you save thousands on your premiums yearly, but tens of thousands (if not more) over the life of your home.

Highest & Lowest Insurance Rates in Arizona Legend: Lowest Estimated Rate Highest Estimated Rate Phoenix Tucson Mesa Glendale Chandler 200 400 600 800 1000 1200 1400 1600 1800 2000 $1434 $2150 $1074 $1610 $1201 $1802 $1455 $2182 $1055 $1583

Laws and Requirements

Most states, Arizona included, don’t automatically mandate that new homeowners purchase homeowners insurance. They leave that mandate to your lending bank. Since your house is still technically the bank’s property until you pay off your mortgage, it’s in their best interest (as well as yours) to make homeowner’s insurance a mandatory requirement before they issue you a home loan. Most Arizona homeowners insurance companies will request that you purchase at least enough coverage to pay for the mortgage value of your home at the time of purchase. In order to make sure you are sufficiently covered, you will also need to take a home inventory.

Taking a Home Inventory

Taking a home inventory, both before purchasing homeowners insurance and on an annual basis thereafter, is integral to protecting your investment. Without it, you and your insurance underwriter would basically just make a wild guess as to how much coverage you need. If that guess is too low, you could be left paying for massive repair expenses out of pocket. And if it’s too high, then you’ll end up wasting thousands of dollars on coverage you don’t actually need.

Choosing What (and How Much) Coverage

Most Arizona homeowners insurance policies will incorporate Dwelling and Personal Property Coverage, Liability Coverage, Medical Payments Coverage, and Additional Living Expenses Coverage into a standard policy. You may also need coverage for:

  • Fires – protection from loss by fire may or may not be covered by your Arizona homeowners insurance policy. If you are concerned about fire damage, which is not an unreasonable concern given Arizona’s hot, arid climate, be sure to mention this to your insurance agent when crafting your policy.
  • Floods – a typical Arizona homeowners insurance policy will not include coverage for flood damage. You may have to add this coverage to your policy, or purchase separate coverage from the National Flood Insurance Program (NFIP).
  • Damage from Winter Storms – despite the fact that winter storms are rarely a problem in Arizona, even in the northern parts of the state, “broad policies” and “special policies” cover damages incurred from the weight of ice, snow, or sleet. “Basic policies”, however, do not.
  • Covering Your Property – disasters usually don’t just damage the physical structure of your home – they can destroy your personal property as well. Most Arizona homeowners insurance companies recommend purchasing a coverage amount equal to approximately 75% of your property’s value.
  • Liability Coverage – Liability coverage helps pay out claims filed when someone is injured or another’s property is damaged while on your land. Most homeowners insurance policies will contain some provision for liability coverage.
  • Umbrella Coverage – some insurance companies will only sell you a policy which covers your home and property up to a certain dollar amount. If you require more coverage, this is usually provided by an umbrella coverage policy.

Replacement Cost vs. Actual Cash Value

Replacement Cost policies will pay for replacing or repairing property based on how much it would cost to repair/replace property when you file a claim. This gives you the broadest financial protection, but at the same time could cost you in higher premiums. Actual Cash Value incorporates the depreciation of assets into the cost to repair or replace them for your insurance company. While actual cash value policies are often cheaper, you will be responsible for a larger portion of the financial burden in the event that disaster strikes.

How Your Credit Score May Influence Your Rate

There are many different variables that get taken into account when calculating your credit score (and how it will influence your annual homeowners insurance premiums). Most homeowners insurance companies rely on a “soft check”, or your insurance score, rather than performing a hard check on your credit history. This helps keep your credit rating higher while still giving the insurance company the information they need in order to determine a premium that gives you the coverage you need (while also protecting their profit margins). Because some insurance companies have data that shows a higher rate of claims filed by customers with lower credit ratings, they may adjust your premium to reflect this trend.

While federal law grants homeowners insurance companies permission to make this check, the state of Arizona has some laws on the books which help to protect consumers like you from artificially inflated premiums as determined by your insurer. If you don’t have a substantial credit history, if you have collection accounts based on medical expenses, if you have a past bankruptcy that is more than 7 years old, or an unfavorable total line of available credit, it is illegal for your homeowners insurance company to use that data against you when determining your premium. It is likewise illegal for your premium to be determined by your income, gender, current address/zip code, ethnicity, religion, nationality, or marital status.

Arizona Homeowners Insurance Rates by Credit Score Legend: Median Credit Homeowner Excellent Credit Homeowner Phoenix Tucson Mesa Glendale Chandler 200 400 600 800 1000 1200 1400 1600 $1629 $1157 $1220 $866 $1365 $969 $1653 $1174 $1199 $851

Learn More

For more information, feel free to click any of the links you see in this article. They all lead to more detailed information about homeowner’s insurance, specifics on purchasing a policy, and how to find the best deal. You should also contact local resources in your state, such as:

The Arizona Department of Insurance

The Official Arizona State Government Website

The Arizona Department of Fire, Building and Life Safety

Or contact them directly through the following resources:

Arizona Department of Insurance – Consumer Assistance Section
2910 North 44th Street, Suite 210
Phoenix, AZ 85018-7269
Phone: 602-364-2499 | Toll Free: 800-325-2548
consumers@azinsurance.gov

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