Arizona Homeowners Are Losing Insurance Coverage Even Without Filing Claims

I recently spoke to some of my neighbors, and they told me about a troubling trend. We live in Cochise County, and they just got word that their homeowners' insurance policies had been canceled because their properties were considered at greater risk from wildfire.

Possibilty of Wildfires in Arizona this year.

Neither of my friends had filed major claims. Neither had experienced fire damage. And more importantly, we haven’t had a serious wildfire in our area since the Monument Fire in 2011. Yet both suddenly found themselves scrambling for replacement insurance coverage.

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Arizona's Unsettling Trend

It's unsettling. Our homes are our biggest investment, and insurance provides the financial safety net that makes homeownership possible. Plus, it’s legally mandated, as Assurant’s website explains. If you have a mortgage, you’re required by your lender to maintain homeowners insurance for as long as the loan exists.

When that insurance is either canceled or not renewed, even for reasons outside a homeowner's control, it creates uncertainty and stress.

Possibilty of Wildfires in Arizona this year.

Why Insurers Are Pulling Back

Wildfires in Arizona have increased in recent years, and data from the Arizona Department of Forestry and Fire Management back this up.

Arizona's wildfire risk has become a growing concern, and insurance companies are reacting. State officials, researchers, and insurers have all documented the rising trend and concern over wildfire exposure in parts of the state. They’re particularly concerned about areas where homes sit near open desert, grasslands, forests, and other wildland vegetation.

Possibilty of Wildfires in Arizona this year.

The issue is significant enough that the Arizona Department of Insurance and Financial Institutions recently created a Resiliency and Mitigation Council to study the availability and affordability of homeowners insurance in wildfire-prone areas.

The council discovered what I learned talking to my neighbors: it’s getting harder and harder to find good, affordable homeowner coverage.

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Where Homeowners Face the Greatest Risk

Arizona's wildland-urban interface areas are being hit hardest. These are places where neighborhoods border natural vegetation.

Some of the impacted communities are in Prescott, Dewey-Humboldt, Rio Verde Foothills, Sedona, Payson, Pine-Strawberry, Flagstaff, and other high-risk regions. They’ve all reported policy non-renewals and significant premium price jumps.

Even areas that haven’t been hit hard by forest and wildfires can be affected if insurance companies decide they’re located too close to vegetation, terrain, weather patterns, or previous fire activity.

burning building

Which Companies Are Tightening Policies?

With the impact of wildfires across the nation, like the recent and no-doubt expensive cost of California’s wildfires, many of the nation’s major insurance carriers are reducing coverage, not renewing policies, or increasing rates.

In Arizona, homeowners have reported trouble with purchasing or renewing coverage through companies like State Farm, Allstate, Progressive, and Farmers Insurance, among others.

READ: Arizona Bracing for Possibly the Worst Fire Season in Years

Couple looking stressed over bills at kitchen table.

A Growing Concern for Arizona's Future

The experience of my neighbors in Cochise County isn’t unusual, and the trend will most likely expand. State regulators are studying the problem, but there is no quick fix.

a house on a hill with a view of the city

We should all be concerned about this trend. Homeowners insurance affects property values, mortgage availability, and the overall health of local communities. If coverage becomes an expensive challenge, the impact will be felt by everyone, whether you own your home or not.

This may have started as a problem for a few high-risk areas, but it’s becoming an issue for all of Arizona.