The Everhold blog
Why your Arizona home insurance went up at renewal when you never filed a claim
Your home insurance can go up even if you never filed a claim, because rates reflect what claims and rebuilding cost for homes like yours across Arizona, not just your own claims. Your dwelling limit, the cap on what the policy pays to rebuild your house, may also have risen, usually costing more. Your roof's age, credit or a lost discount can matter too, so compare your declarations page, the summary at the front of the policy, with last year's.
Why would my premium rise if I never filed a claim?
Insurance spreads the cost of claims across many households. An insurance company sets a rate for each group of similar homes from expected future claims; your premium, the price you pay, is that rate adjusted for your home's own details, including your claims history. When claims across your area or the state cost more, the whole group's rate can rise, even for households that never filed.
Arizona's rating law, A.R.S. 20 384, tells insurance companies to consider claims and expenses in and outside Arizona, disaster risk and cost trends, and lets them group similar homes in any reasonable way.
What's pushing home insurance rates up in Arizona?
Several factors can push rates up, none tied to your own claims:
- Rebuilding costs. When labor and materials cost more, so does every repair and rebuild.
- Weather. Monsoon wind and hail, and wildfire in parts of the state, can bring many claims at once.
- Reinsurance. When insurance companies pay more for their own insurance, part of that cost can reach your premium.
- Claims near you. Some insurance companies weigh the claims history of homes in your area.
Did your dwelling limit go up?
It may have, and a higher limit usually means a higher premium. Find your dwelling limit, often listed as Coverage A, on the declarations page. Some policies carry an inflation guard, an endorsement (an add on to the policy) that raises your limits by a set share each year. Many insurance companies also raise the dwelling limit at renewal to follow building costs or a new rebuild estimate. How this works varies by policy and by insurance company.
The limit is meant to track the cost to rebuild, not the sale price, which includes the land. If the higher limit is the reason, lowering it can look like a simple fix. Be careful. Many policies, including the standard homeowners form, HO-3, pay the repair cost up to your limit, with nothing taken off for wear, only if your limit is at least a set share of the full rebuild cost. Set it too low and even a small claim can pay less. The Home Coverage Checkup compares your limit with today's estimated rebuild cost.
Could your roof, your credit or a lost discount be the reason?
Insurance companies also weigh the age and condition of your home and roof, so an aging roof can change the price. If a discount came off, such as one for insuring your home and car with the same insurance company, your premium can rise even when the rate for homes like yours didn't change.
Many also use a credit based insurance score, a rating built partly or fully from credit information, so a change in your credit can move your price even with no claim. A.R.S. 20 2110 limits what the score may use, and the next section covers how to ask whether it played a part.
Can you ask why your price went up?
Yes, and asking can tell you which reason is yours. Ask your agent or the insurance company what changed at renewal: the rate for homes like yours, your dwelling limit, a discount, or the facts on file about your home.
For some changes, Arizona law also gives you a right to the reason in writing. A.R.S. 20 2102 lists them for a policy the insurance company reviewed for you individually. One is charging more because the insurance company's information differs from what you gave it. Another is a higher priced rating tier (a pricing group), or a discount left off, because of your credit report, insurance score or lack of credit history. A rate change for your whole group isn't on the list.
When one of these applies, A.R.S. 20 2110 requires the specific reason in writing, or a written notice that you can ask for it. Ask in writing within ninety business days after that notice is sent. The insurance company must answer, with the information behind it, within twenty one business days after it receives your request. When credit was the basis, the reason must also give the report's source, how to get a copy, and up to four main factors from the score.
Doesn't the state approve rate increases?
No approval is needed before a new rate is used. Under A.R.S. 20 385, insurance companies licensed in Arizona file their rates with the director of the Arizona Department of Insurance and Financial Institutions within thirty days after the rates take effect. A.R.S. 20 383 bars rates that are excessive, inadequate or unfairly discriminatory. Under A.R.S. 20 388, the director can order such a rate out of use.
Does the insurance company have to warn you before a price increase?
Not under Arizona's homeowners notice rule, A.R.S. 20 1654, which sets no separate notice for a price increase alone, so the new premium may first appear on your renewal bill or your mortgage company's escrow statement. The rule does require notice at least thirty days before the policy period ends in two cases: nonrenewal, meaning the insurance company declines to renew, and a renewal with lower limits or with part of your coverage removed. Moving you to an affiliated insurance company, which can bring a different price, isn't a nonrenewal. For next year, the free Renewal Watch emails a short note on what rates are doing about 60 days before your renewal month.
What to check this week
- Lay this year's declarations page next to last year's and mark every change: limits, deductibles (the part of each claim you pay yourself), endorsements and discounts. Ask for any copy you don't have.
- Ask your agent or the insurance company whether an inflation guard or a new rebuild estimate raised your dwelling limit, and which details about your home are on file, such as the roof's age, the year built and the square footage. Ask for a correction if one is wrong.
- If a notice mentions your credit or insurance score, ask in writing for the specific reason and keep a dated copy.
- If you're thinking about a higher deductible, first write down each of your deductibles in dollars, including any wind and hail deductible, a separate deductible some policies apply to wind and hail damage, often set as a share of your dwelling limit. A higher deductible puts more of each claim on you.
- Before your renewal date, compare home insurance quotes built on this year's limits, deductibles and endorsements. If that date has passed, ask how switching before the term ends would work.
Get a second opinion on your home or auto renewal
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