Arizona’s skyrocketing insurance rates make home ownership even more expensive

PHOENIX — While rising home prices and mortgage rates have taken center stage over the last few years, insurance premiums are also contributing to housing affordability challenges in Arizona.

Arizona’s home insurance rates increased by more than 70% from 2019 to 2024, ranking the fourth-highest in the country according to a recent Lending Tree report. The national average was up 40.4% within the same time frame.

“It used to be that insurance was kind of a fixed cost that gets rolled into your escrow,” said Shannon Martin, a Bankrate insurance expert. “The rate can change slightly here and there, but you’re not expecting huge significant increases that can impact your ability to pay your mortgage, but that has changed.”

She said rising rates are reshaping the homebuying process. Now, shoppers are being advised to get home insurance quotes early, so they know what to expect.

How much does home insurance cost in Arizona?

Arizona’s average annual premium for $300,000 in dwelling coverage is more than $2,300, though that varies significantly depending on where you live. Phoenix residents spend a little more than $2,800 per year for that level of coverage — about $340 more than the national average, according to Bankrate.

Martin said rate increases are being driven by a number of issues, including rising home values and the higher cost of repairs and rebuilding.

“You look at the cost of building materials, the cost of labor, and the increased risk from extreme weather — all those are factored into the equation,” Martin said.

While Arizona doesn’t typically face large-scale natural disasters like tornadoes or hurricanes, it does experience extreme heat, flooding and wildfires that play a role in home insurance rates.

Martin said it’s important to note that standard policies don’t cover damages from the heat or floods, and homeowners would need to pay extra to fill those gaps.

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