Before You Jump Ship

Derek Kartchner | Gila Insurance

Recently, I heard something I haven’t heard in quite some time: two companies announced rate decreases. This was on coverage for primary residences, and for the first time, it might be too soon, but I think we are seeing things in the property market stabilize. That said, not all carriers are reducing rates, but the presence of multiple carriers looking to take rates down is a positive sign. While each carrier will evaluate its own results and take its own actions, this is encouraging. Don’t get me wrong—I’m not saying the insurance storm has officially subsided, but it seems the storm is at least taking a breath.

So, what do I see for the future? I suspect rates will remain high but stable, meaning that 25-50% rate increases will hopefully be a thing of the past. Insurance rates will always at least match the cost of inflation, so yes, rates will continue to increase year over year, but hopefully at a slower rate. That said, while rates may stabilize, I expect carriers will continue to use their other lever: underwriting. They may not increase rates, but they will be very selective about the homes they choose to insure. So, before you bail on your current company, looking for lower rates, be sure you know what they’ll be looking for. In Arizona, there are a few things that often trip up customers trying to switch carriers: Structural Condition, Liability Hazards, Major Systems, and Wildfire Scores.

Structural Conditions
The structural integrity of a home is a top priority. Inspectors assess the roof for missing shingles, leaks, or wear that could allow water damage. They also check the foundation for cracks, often indicated by uneven floors or sticking doors, which could signal costly instability. Even simple issues like peeling paint, missing flashing, or overgrown trees and bushes can cause carriers to cancel coverage or require updates before proceeding. Poor conditions may require repairs before coverage is approved.

Liability Issues

Features that pose injury risks are closely reviewed. For example, swimming pools without fences could lead to drowning incidents, while trampolines risk falls, and aggressive pets might cause bites or attacks. Insurers may mandate extra liability coverage or safety upgrades like fencing to mitigate these hazards. Another concern is debris, specifically debris that attracts critters or kids.

Major Systems

The condition of critical systems is vital. Plumbing is checked for old pipes prone to leaks, which can cause water damage. Seriously, if your home (primary or otherwise) still has galvanized or polybutylene pipes, you’ll have a hard time finding coverage, as carriers actively look for this. If you have these, it's time to get that updated. Electrical systems are inspected for outdated wiring that risks fires. HVAC systems must be maintained to avoid carbon monoxide leaks or inefficiency. Updates may be required if these are substandard. Roofs—yes, roofs again—must be in order. Many carriers won’t provide coverage on a shingle roof unless it has been replaced in the last 15 years. Alternatively, some carriers will offer coverage but limit the roof to actual cash value (meaning they’ll pay out essentially nothing) if the roof is older than 15 years. This is usually the biggest hurdle for many customers trying to switch insurers.

Wildfire Risk

Outside of roofs, wildfire assessments are one of the biggest issues facing consumers in Arizona. I’m not referring to Flagstaff or Show Low specifically, but all of Arizona. Major parts of Tucson, the East Valley, and anything on the “outskirts”—Fountain Hills, Paradise Valley, San Tan, and Goodyear—all have issues. That doesn’t mean you can’t find coverage; it just means it might be difficult.

Conclusion

There are some positive signs indicating we might return to the “good old days” of insurance, where increases were moderate, and if they weren’t, you could just switch. But we’re not there yet. If you’ve stayed on top of your home’s maintenance, you might find some options out there. Look to an independent agent or broker, like Gila Insurance Group, to help you find what works best for you and determine if switching makes sense.