While extreme weather drives home insurance prices to record highs across the nation, a new analysis finds Arizona’s rates remain below the national average.
The national average annual premium for home insurance has risen to $2,470. That figure is a 9% increase since 2023, according to a breakdown by financial firm Bankrate.
In contrast, Arizona homeowners pay an average of $2,309 per year. This cost represents about 2.99% of the typical household’s income. Premiums in the Phoenix area are slightly higher, averaging $2,387.
The analysis is based on quotes for a standard scenario: a married couple with good credit and a clean claims history insuring an eight-year-old home valued at $300,000.
Climate Risk Dictates Cost
The report highlights a direct link between extreme weather and insurance costs. States vulnerable to hurricanes and tornadoes face the highest premiums.
Nebraska tops the list with an average annual cost of $6,425. Louisiana ($6,274) and Florida ($5,735) follow closely. These states are frequently hit by severe weather, including hurricanes, tornadoes, wind, and hail.
Arizona avoids those specific threats but faces a different climate danger: wildfires. According to property data firm CoreLogic, over 123,900 homes in Arizona are at moderate or greater risk from wildfires.
The cities with the most at-risk homes are Flagstaff (33,466 homes) and Prescott (31,883 homes). This widespread risk means homeowners across the state, including in Maricopa County, could still see price increases or even policy cancellations.
A Complex Financial Picture
The report also notes that high premiums do not always equate to a high financial burden. Some areas with expensive insurance also have higher median incomes.
For example, the Denver metro area has an average annual premium of $3,644. However, because the median household income is $103,055, the cost consumes only 3.54% of their pay.
There is also a sign of improvement in one hard-hit state. Efforts by Florida lawmakers to stabilize the market appear to be working. The analysis shows average premiums in Florida dropped by $579, or 9%, from 2023 to 2025.
A Warning Sign for the Market
A separate December 2024 U.S. Senate Budget Committee report points to a broader, worrying trend. It found that climate change is causing insurers to non-renew policies in high-risk areas.
These non-renewals are often an early sign of a destabilizing insurance market. The report concluded that as climate change intensifies, the availability and affordability of home insurance are expected to worsen.
It is important to note that individual insurance costs vary significantly. Final premiums depend on many factors, including the home’s value, its construction materials, and the homeowner’s credit score. The Bankrate figures also do not include the cost of separate flood insurance policies.
Related topics:
- Swann Urges Ministers to Take Practical Steps to Cut Northern Ireland Car Insurance Costs
- PhonePe Launches Home Insurance Product Offering Comprehensive Coverage
- Utah Ranks Among the Most Affordable States for Home Insurance
