Arizona Homeowners Struggle with Soaring Insurance Costs
Many Arizona homeowners are grappling with a dramatic surge in insurance rates, with some seeing their premiums triple or even quadruple. This sharp increase is primarily attributed to the escalating risk of wildfires across the state, as reported by KJZZ Phoenix.
Vivien Winneke, a homeowner and assessor for the Dewey-Humboldt Firewise community, has taken proactive measures to mitigate fire risk, such as trimming trees and clearing vegetation. However, even these efforts haven’t shielded her from the impact. Her insurance rates jumped from $1,450 annually to $4,500. “That’s more than my property taxes,” Winneke stated. “I’m on a fixed income, like most of the people in Dewey-Humboldt… Most of the people here are retired, and they’re not high income. I actually felt like I might have to sell the house.”
Winneke’s situation isn’t unique. Homeowners across Arizona are facing similar challenges. According to AZ Central, home insurance premiums have increased by 62% since 2019, the highest rise in the United States.
Factors Driving Up Insurance Rates
The recent surge in rates follows major wildfires, such as the Palisades and Eaton fires, which destroyed thousands of homes. These events, combined with rising costs for rebuilding, have led insurers to reassess their risk exposure.
Other factors include:
- Increased Claims: Insurers are paying more to cover claims in high-risk areas.
- Rising Replacement Costs: The cost of rebuilding homes has increased by 44% in the last five years due to inflation, according to Laura Curtis, VP of the American Property Casualty Insurance Association.
- Limited Coverage: Some homeowners are facing denial of claims or the removal of coverage altogether. Winneke was denied by 22 insurance companies before finding one that only covered half of her home’s value.
“Insurance premiums go up for two main reasons: higher losses and higher replacement costs,” explained Chris Low, chief economist at FHN Financial, per Bankrate. “… If wildfires become more common in the Northeast, insurance will become more expensive and also harder to get — like in California.”
National Trends and Future Outlook
The issue extends beyond Arizona. In California, State Farm requested a 22% rate increase, and in North Carolina, the North Carolina Rate Bureau proposed a 42.2% increase due to hurricane risk.
A January 2025 report from the U.S. Department of the Treasury revealed that homeowners in areas affected by severe weather pay significantly more for insurance than those in lower-risk areas. Furthermore, approximately 7.4% of Americans lack homeowners insurance altogether, a percentage that could rise due to increasing premiums.
Former Secretary of the Treasury Janet L. Yellen noted, “This report identifies alarming trends of rising costs of insurance — to consumers and insurers themselves — as well as lack of availability of insurance, all of which threaten the long-term prosperity of American families.”
Addressing the Crisis
Efforts are underway to address the rising costs. In Arizona, the state’s Resilience and Mitigation Council is researching the issue and aims to make recommendations by the end of 2025. Nationally, housing organizations have urged the government to address rising premiums, calling for federally backed homeowners insurance.
Some experts suggest that reducing inflation could help lower insurance rates. Bradley Flowers, founder of Portal Insurance, told Insurance Business that lower interest rates could also reshape insurers’ financial strategies.
