Arizona Homeowners Insurance Rules Every Owner Should Know

How home insurance rates work in Arizona

• Use and file: Arizona insurers can start using a rate change immediately and file it with DIFI within 30 days.
• Rate standards: DIFI reviews rates to make sure they are not excessive, inadequate or unfairly discriminatory. By law a rate cannot be found excessive if adequate competition exists; DIFI says more than 100 companies are licensed to offer homeowners insurance in Arizona.
• Arizona losses only: insurers must base Arizona homeowners premiums on Arizona loss experience, though higher reinsurance costs from catastrophes elsewhere can still be passed on.
• Costs: DIFI cites Verisk data showing Arizona residential reconstruction costs rose 6% from September 2022 to September 2023, and notes national construction costs rose more than 30% over five years.

Cancellation and nonrenewal notices

If a nonrenewal rests on wrong data, such as square footage or roof age, DIFI says to ask the insurer for the specific data it used and send corrected information right away.

Dogs and liability: A.R.S. § 20-1510

Under A.R.S. § 20-1510, effective June 30, 2023, a dog's actual or perceived breed may not be the sole factor in homeowners or renters underwriting or rating. DIFI explains that insurers may still act on factors other than breed, for example:

• charging more, reducing liability coverage or declining for owning any dog, applied to all breeds;
• excluding animal liability entirely, or excluding a specific dog with a documented bite history;
• setting conditions unrelated to breed, such as a fence requirement for dogs over a set weight;
• considering a dog's bite history, age or the number of dogs.

The law applies to homeowners and renters policies (HO-1 through HO-8), not to commercial, excess or umbrella liability policies.

Gaps in a standard policy

Our flood gap guide and water damage guide cover these in detail.

Sponsored note: Arizona homeowners lean hard on air conditioning, and a homeowners policy generally does not pay when an AC unit or other system wears out. A home warranty is a separate service contract, not insurance. It typically pays to repair or replace covered home systems and appliances that break down from normal wear and tear, which homeowners insurance generally does not cover. Plans, limits, exclusions and service fees vary, so read the contract before buying. If you want that kind of protection, compare a home warranty quote from Choice Home Warranty (sponsored).

Getting the coverage amount right

• Insure the home for replacement cost, not market value (DIFI). Our replacement cost guide explains the difference.
• Know whether your belongings are insured at actual cash value or replacement cost; DIFI notes most standard policies use ACV for personal property unless you buy replacement cost.
• Raising your deductible can lower your premium; DIFI suggests asking your agent whether the trade-off fits your budget. Our deductible break-even calculator does the math.
• Your lender may require coverage at least equal to the mortgage, but you do not have to buy from the insurer your lender recommends (DIFI).
• In wildfire-prone areas, defensible space and fire-resistant materials matter to insurers; DIFI lists insurers writing in forested areas on its wildfire resources page.