Home Insurance Premiums Are Set to Surge in Arizona and 12 Other States as Climate Change Sparks an 'Insurance Crisis'
The financial toll of climate change is hitting home—especially for homeowners in states like Arizona, where insurance premiums are expected to rise by 7% in 2024. Natural disasters, driven by increasingly unpredictable weather patterns, are wreaking havoc across the country, and home insurance costs are climbing as a result. This growing insurance crisis is pushing companies to increase premiums, leaving many residents in high-risk areas like Phoenix with tough choices ahead.
While coastal states have long dealt with the destruction caused by hurricanes and flooding, the situation is changing. Even traditionally safer regions, like the Phoenix metro area, are seeing rising insurance rates. The expanding reach of extreme weather is causing ripple effects across insurance markets, leaving no state truly immune.
Arizona Faces Its Own Insurance Challenges
The projected 7% increase in home insurance premiums for Phoenix and the rest of Arizona reflects a broader trend of rising costs due to climate-induced disasters. While Arizona isn’t typically thought of as a state vulnerable to hurricanes, other natural threats, like severe heat waves, droughts, and wildfires, are becoming more frequent and intense.
Wildfires have become a persistent threat across the western U.S., and Arizona is no exception. Rising temperatures and prolonged drought conditions are making areas across the state more prone to devastating fires, which in turn increases the financial risk for insurance companies. As insurers adjust their pricing to account for these new realities, Arizona homeowners are feeling the effects.
Phoenix, as the state’s largest urban area, is at particular risk. The city has experienced extreme heat waves in recent years, which have stressed infrastructure and added to the challenges homeowners face. While Arizona’s insurance rates are not as high as states like Michigan (with its projected 14% increase), the 7% hike still represents a significant rise for many residents.
How Climate Change Is Impacting Home Insurance Across the U.S.
The growing insurance crisis isn’t just an Arizona problem. Across the U.S., states are seeing drastic home insurance premium hikes due to increasingly severe natural disasters. Hurricanes Milton and Helene, for example, are estimated to have caused $55 billion in damages, while last year’s 28 extreme weather events led to $92.9 billion in total damage. These large-scale losses are forcing insurance companies to recalibrate their risk assessments, leading to higher premiums for homeowners.
States like Florida, California, and Louisiana—which have experienced repeated climate disasters—are seeing some of the sharpest premium increases. However, even so-called “climate havens” in the Midwest and Southwest, including Arizona, are not exempt from rising insurance costs. As climate change accelerates, the number of severe weather events is growing, and homeowners everywhere are feeling the financial impact.
Arizona Among 13 States Facing the Biggest Insurance Hikes in 2024
Insurify, a top insurance comparison platform, has identified 13 states facing the largest home insurance rate increases in 2024. Arizona, with its 7% hike, joins this list as one of the states most impacted by these insurance trends. Here are the projected rate increases for 2024:
- Mississippi (Jackson): 4% increase
- Hawaii (Honolulu): 4% increase
- Oklahoma (Oklahoma City): 5% increase
- Iowa (Des Moines): 7% increase
- Arizona (Phoenix): 7% increase
- Colorado (Denver): 7% increase
- Minnesota (Saint Paul): 8% increase
- Alabama (Montgomery): 9% increase
- Arkansas (Little Rock): 9% increase
- Illinois (Chicago): 10% increase
- North Carolina (Raleigh): 10% increase
- South Carolina (Columbia): 11% increase
- Michigan (Lansing): 14% increase
Arizona’s 7% rise may seem moderate compared to Michigan’s 14%, but it signals a broader insurance trend that Phoenix-area homeowners should be aware of. Insurers are becoming more selective about coverage in high-risk areas, and even states without hurricanes are seeing their rates climb due to other climate threats like wildfires and heat waves.
What Arizona Homeowners Can Expect Going Forward
As climate change progresses, Arizona homeowners should expect their home insurance costs to continue rising. Extreme heat, drought, and wildfires will likely become more frequent, adding to the financial strain on insurance companies. This, in turn, will drive up premiums further.
While reducing carbon emissions and slowing climate change are essential long-term solutions, the effects of extreme weather are already here. For homeowners in Phoenix and across Arizona, dealing with higher insurance premiums is becoming an unavoidable reality. As insurers pull back from the riskiest areas or leave the market altogether, finding affordable coverage could become increasingly difficult.
According to Insurify, “Even with mitigation efforts, American homeowners—especially in states on the verge of an insurance crisis—should expect weather-related damages to push up premiums and drive insurers out of high-risk areas in the near term.”
For Arizona, a state not traditionally seen as a climate disaster hotspot, the growing risks from heat waves, droughts, and wildfires are making it a key player in the nationwide insurance crisis.
