Affordable or Overpriced: The Average Cost of Home Insurance in Arizona

Home insurance is essential for homeowners to protect their homes against all odds. You never know when natural disasters may strike to cause damage or when items in your house may get lost or stolen in a burglary.

With homeowners insurance, you don’t have to pay to repair damage or replace lost items. However, with increasing living costs, you may wonder if home insurance is a worthy investment. This blog aims to answer your question by providing the estimated average Cost of Home Insurance in Arizona, as well as the factors that influence pricing.

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Is Homeowners’ Insurance Required in Arizona?

In Arizona, homeowners’ insurance isn’t mandatory by law, unlike auto insurance. However, some mortgage lenders may require it as part of the contract. They view it as a way to protect their investment. With home insurance, the home buyer can easily repair any damage, and in the event they fail to meet their mortgage obligations, they will return the house in good condition.

In all cases, homeowners’ insurance is highly recommended. While paying monthly insurance premiums may seem like a financial burden, it can barely compare to the cost of repairing damage or replacing expensive items that were stolen.

What Does the Standard Homeowners Insurance Policy Include?

While home insurance is customizable and can be tailored to fit the owner’s needs, there are standard coverages that all standard policies have.

Dwelling Coverage

This coverage protects your home’s structure, which includes the walls, roof, and built-in appliances, from property damage. Covered perils that you get protected against include fire, lightning, windstorms, and hail.

Because Arizona is susceptible to monsoons and wildfires, you may need to be sure they are included as perils in your dwelling coverage. Moreover, experts recommend getting replacement cost coverage instead of actual cash value. Replacement cost coverage pays the full cost to rebuild your home without deducting for depreciation.

Personal Property Coverage

Your personal items also need protection against unexpected events. For that, you have personal property coverage to protect your furniture, clothing, electronics, and more. If they’re damaged or stolen due to covered events, the insurance company covers them. In Arizona, this coverage is particularly helpful as wildfires and dust storms are common.

A standard policy usually offers actual cash value, but you can upgrade to replacement cost coverage so you get full reimbursement for lost items without depreciation deductions. Personal property coverage doesn’t typically include expensive items, like collectibles and jewelry, but you can always add endorsements to extend coverage.

Personal Liability Coverage

This coverage protects against bodily injury and property damage you or your family inflict on others. One example would be a guest slipping and falling on your stairs, sustaining an injury.

Another example is your child accidentally breaking the neighbor’s windows. The guest and the neighbor can file a lawsuit asking for compensation, which personal liability coverage pays for, in addition to other legal expenses.

Medical Payment to Others

In the case mentioned above, where a guest is injured on your premises, personal liability pays for the legal fees. For recovery, a coverage called medical payment to others handles the medical bills, regardless of who is at fault. This coverage is important in cities like Arizona, where outdoor activities and pools are common.

Wind/Hail

Wind/Hail are common in monsoon season, so standard home insurance policies in Arizona typically have coverage against them. Make sure to check your policy to make sure you have adequate coverage and be aware of any exclusions.

Additional Living Expenses (ALE)

In Arizona, events like wildfires and severe weather storms can displace homeowners. If your home is inhabitable for a covered reason, ALE coverage pays for temporary housing, meals, and other living expenses. Policies often cover these expenses for a specified period, such as 12 to 24 months.

Additional Home Insurance Coverage Options

Aside from the standard coverage options, you can always get endorsements for extra safety. For example, flood insurance isn’t part of the standard policy. However, Liberty Mutual offers flood insurance in partnership with the National Flood Insurance Program (NFIP) under the Federal Emergency Management Agency (FEMA). Add-ons increase insurance premiums, but they enhance protection.

How Much Does Homeowners Insurance Cost in Arizona?

The average cost of home insurance in Arizona differs for each homeowner. No two individuals have the same insurance needs. Many factors also come into play, which we will discuss shortly. Homeowners’ insurance costs an annual average of $1,991, as of 2024.

Note that Arizona is one of the most expensive states when it comes to homeowners’ insurance premiums. Although it is below the national average, it has increased an average of 48% from 2021 to 2024 due to expensive construction and building materials, and climate change, among other reasons.

What Factors Influence the Cost of Homeowners Insurance in Arizona?

As we mentioned, in the insurance industry, home insurance premiums are affected by many factors, so that no two policyholders pay the same amount. So, let us go over some of the factors that homeowners’ insurance companies consider, like location, crime rates, weather risks, home value, age, and more.

Location

One of the most important factors is your home’s location. Your home’s zip code widely impacts the price of insurance due to differences in crime rates, wind/hail exposure, wildfire danger, and claims history in the area. Areas prone to wildfire danger, like the outskirts of Phoenix and mountain regions, are high-risk areas, which makes them more expensive than other areas.

An example of how location affects home insurance rates is the difference between Phoenix and Surprise. Home insurance in Phoenix costs $2,143, but costs as little as $1,743 in Surprise. That’s because Phoenix is more exposed to extreme weather conditions, like heat, monsoon storms, and hail. Moreover, Phoenix is more densely populated, which is reflected in higher crime and vandalism rates.

Insurance Score

Your insurance score is one that insurers derive from your credit report, similar to your credit score. The main difference between your insurance score and credit score is that the insurance score is used by your insurance provider to calculate your home and auto insurance premiums.

A high insurance score indicates that you are financially responsible, while a poor score signals the opposite. That’s why a high score can get you a discount, an average score doesn’t affect your home insurance rates, and a low score can get you a higher insurance rate. For example, homeowners with poor credit in Arizona pay an average of $9,384 for homeowners insurance, which is $7,393 more than the state average.

Home’s Value

A home’s value is also a huge factor in determining the cost of homeowners’ insurance. Insurers use the replacement cost, not the market value, to calculate the premium rate. Replacement cost is the value to rebuild the home, while market value is the home’s selling price in an open market.

A home’s value differs depending on its square footage, materials, and age of the house. A modern two-bedroom would be much cheaper to insure than an old five-bedroom. The materials used to build the house also factor in. The more expensive and uncommon the materials are, the higher the rate gets. On the other hand, some luxury features, like a pool, also increase the home’s value.

Home’s Age

Old homes are usually prone to system failures, especially if they are older than 25 years. Their wiring, plumbing, roofs, and structural components are aging and more likely to fail, leading to frequent, costly claims. Moreover, old homes are sometimes built with materials that are hard to match today, like plaster walls, slate tile roofs, or hardwood floors, making the replacement costs expensive.

Outdated systems and construction materials make old homes high-risk for insurance companies. On average, a new house may get home insurance premiums cheaper by up to 36%. To save money on your old home, you may need to do renovations and upgrades.

Claims History

Your claims history, an important metric for insurance companies, contains the insurance claims you’ve filed. According to statistics, frequent claims signal that you’re likely to file more along the way, making you a high-risk client. On the other hand, a claims-free history makes you seem less risky. People with a clean record get cheaper homeowners insurance premiums.

Proximity to Fire Protection

Homes that are near fire stations and fire hydrants receive better ISO fire ratings, leading to lower homeowners’ insurance rates. Insurers factor in delayed response time if the location is far from a fire station. The firefighters will arrive later after a lot of damage.

How to Get Affordable Homeowners’ Insurance

Arizona Homeowners’ insurance might seem like an extra expense if you’re on a tight budget. Still, it offers a lot of protection, and it doesn’t have to be expensive. Here are our top tips on how to get home insurance discounts and affordable rates.

1. Compare Homeowners’ Insurance Quotes

Each insurance company has its formula to calculate the cost of Arizona homeowners’ insurance. It’s wise to compare the value you get, in the form of coverage, to the price you pay. An insurance agent can help you pick a good deal. so, here you are a full guide about How to Compare Arizona Home Insurance Quotes.

2. Understand Your Coverage Needs

Many people fall into the trap of getting overinsured or underinsured. Understanding the amount of coverage you need can lead to significant savings on insurance costs. Arizona homeowners have specific needs because of the extreme weather conditions in the state, like the harsh summer heat and monsoons. It’s important to understand how much you need and what other coverage options you can pass on.

3. Bundle Arizona Homeowners’ Insurance

Bundling multiple policies can help you save money. For example, bundling Arizona homeowners’ insurance with auto insurance costs less than buying each one individually. You could also bundle your homeowners’ insurance with your second home or vacation home insurance.

4. Improve Security Systems

Securing your home in Arizona will make it less susceptible to burglary and vandalism. Installing smoke detectors, deadbolt locks, and burglar alarms can earn you a discount of 5% or more. Also, premium systems, like sprinklers or monitored alarm systems, can increase that discount to 20%. Just make sure to alert your insurance company of the new installations.

5. Upgrade Home Systems

If you live in an old house, upgrading its systems can save you money in the long run, and save your life too. Old wiring, heating, and electricity systems are fire hazards, and signal high risk to insurance companies.

An old plumbing system can also cause water damage, which is expensive to fix, and may lead to mold if not addressed promptly. Upgrading your home systems can get you homeowners’ insurance discounts.

6. Raise Your Deductible

Your deductible is the amount you pay upfront after making a claim, before the insurance company can cover you. The higher the deductible is, the lower the insurance premium gets. While it may seem tempting to set a high deductible, make sure you’re ready to pay the amount any time you file a claim.

7. Keep a Clean Claims Record

A clean record reduces your homeowners’ insurance’s average premium significantly. Insurers reward policyholders who stay 3-5 years claims-free. To reduce claims, make sure your house is protected against preventable damage. Moreover, if the damage happens and you can afford to cover it, it’s better to do that than file an insurance claim.

8. Maintain a Good Insurance Score

Your insurance score can get you a much higher or much lower home insurance rate. A homeowner with a poor credit score could possibly pay up to 8 times more than a person with an excellent score. To maintain a good score, pay your bills on time and regularly check your credit reports to see if there are any gaps to fill.

Frequently Asked Questions

How much is homeowners’ insurance?

In Arizona, the average annual homeowners insurance premium is approximately $1,961–$2,513, depending on coverage limits and data source. A $300,000 home would pay $1,961 per year if the deductible is $1000.

Is home insurance high in Arizona?

Home insurance is considered expensive in Arizona. While it still falls slightly below the national average, the cost of homeowners’ insurance has increased significantly from 2021 to 2024, due to expensive construction and building materials, climate change, among other reasons.

How much is homeowners’ insurance on a $500,000 house?

A home with $500,000 in dwelling coverage in Arizona typically costs around $2,634 to $3,206 per year, depending on the provider and deductible.

How much is homeowners’ insurance on a $150,000 house?

In Arizona, a home with $150,000 in dwelling coverage costs around $1200-$1300 annually, depending on many factors, like the insurance company, location, and deductible.