Would you be able to pay for repairs if a fire damaged your home or a flash flood pushed three feet of water into your living room and kitchen? If you have homeowners insurance, the answer is yes, even if you don’t have a large savings account.
Homeowners insurance provides financial protection when your home is damaged, your belongings are stolen, or someone is injured on your property. Continue reading to learn more about home insurance, including what kind of homeowners insurance makes the most sense in Arizona and how you might be able to reduce your premiums while maintaining good coverage.
Types Of Homeowners Insurance Coverages Suggested For Arizona
A standard homeowners policy in Arizona covers your home and belongings in several situations. Those include:
- Dwelling coverage: This part of the policy covers your home’s structure, such as the roof and walls, if damaged.
- Other structure coverage: The policy also covers other structures on your property that are damaged. Examples include a fence or detached garage.
- Personal property coverage: Homeowners insurance covers the loss if your belongings are stolen or damaged in a fire or flood.
- Personal liability coverage: If a visitor is injured on your property, your homeowner’s insurance protects your assets if you’re sued.
- Medical payments to others: The policy will also cover the medical expenses of anyone injured on your property.
- Loss of use coverage: Homeowners insurance will help pay your living expenses if you can’t live in your home while it’s being repaired due to a covered loss.
Typically, homeowners insurance covers specific kinds of incidents, known as perils. The policy will usually list what perils are covered, such as fire, windstorm, vandalism, theft, falling objects, smoke and explosions.
However, standard homeowners insurance policies don’t cover floods. Since Arizona homeowners may face flooding during monsoon season, insurers recommend that you purchase a separate flood insurance policy to protect your property and belongings in case of flooding. A flood insurance policy may be a good idea even if you don’t think you’re at high risk of flooding. The Insurance Information Institute notes that 90% of natural disasters involve some type of flooding. One out of every five flood claims are filed by homeowners who live in a low- or moderate-flood-risk area.
You may also want to purchase personal property replacement cost coverage. The insurance company will pay to replace your damaged or stolen property with new replacement items with this coverage. Without replacement-cost coverage, the insurer will only reimburse you for the estimated value of the used items, which won’t be enough to replace them with new items. For instance, the couch you spent $900 on three years ago might be valued at $100 as a used piece of furniture.
You also have the option of buying replacement-cost coverage for dwelling coverage. Because the prices of building materials have been rising, rebuilding your home might cost more than its market value. You may decide higher premiums for replacement-cost coverage are worth it to be sure your insurance will cover the cost of rebuilding.
How Much Is Homeowners Insurance In Arizona?
The price of homeowners insurance in Arizona varies and is based on many factors. They include:
- Location of the house: Insurance costs may be higher in areas with a history of wildfires or vandalism, for instance.
- The age of the home: Newer homes are built to current codes, so they are cheaper to insure than older homes that may need to be brought up to code during covered repairs.
- Size and style of home: Bigger homes are worth more and cost more to insure. The materials used in the home may also affect the insurance rate. For example, a concrete home is better able to withstand strong winds than a wood-frame house.
- Your claims history: If you’ve made previous claims to your insurer, the insurance company may assume you’ll make more claims and charge you a higher rate.
- Your deductible: The deductible is the amount you pay toward a loss before the insurance kicks in. For example, if you have $5,000 in storm damage and a $1,000 deductible, you’d pay $1,000 toward the repairs, and the insurance would cover the other $4,000. When you select a higher deductible, your insurance rate is lower.
With those factors in mind, Arizona’s average home insurance cost may differ from what you pay. According to Nerdwallet, the average cost of homeowners insurance in Arizona was $1,599 in 2022. The average cost in Phoenix was $1,839 annually and $153 per month.
Is Homeowners Insurance Required In Arizona?
Arizona doesn’t require homeowners to purchase home insurance. However, if you have a mortgage on your property, the lender can require you to have insurance coverage that is at least equal to the amount you owe on the loan. With a mortgage, the home serves as collateral, and the lender wants to be sure the house will be repaired and maintain its value after a fire, storm or other catastrophe occurs.
Tips When Shopping For Homeowners Insurance In Arizona
It’s smart to shop around for homeowners insurance in Arizona. When shopping for a homeowners policy, take these steps:
- Get quotes from several insurance companies.
- Ask if the company offers a discount for multiple policies, such as having your car insurance and homeowners policy with the same company.
- Let the insurance company know about alarms and safety features installed at your home, such as fire alarms or a home security system. The insurer may discount your rate if you have such equipment.
- Ask how increasing the deductible will affect your insurance rate. If you can set aside some savings to cover a higher deductible, you’ll pay less in annual premiums.
How Can You Save On Homeowners Insurance In Arizona?
Homeowners insurance is an essential financial planning tool that protects you from having to pay huge repair bills if your home is severely damaged. It also covers you in case of theft, vandalism or someone gets injured on your property. While mortgage lenders require insurance, even homeowners who don’t have a mortgage should insure their property.
Arizona Central Credit Union members can save more than $500 a year on homeowners insurance through a member-exclusive program1. Visit our Homeowners Insurance page for more information. For additional inquiries, visit our contact us page.
1.Average annual savings based on a countrywide survey of new customers from 1/27/2014 to 1/16/2015 who reported their prior insurers’ premiums when they switched to Liberty Mutual’s Group auto and home program. Savings do not apply in MA.
