Let’s talk straight about homeowners’ insurance. Whether you are a homeowner, a landlord, or the owner of a vacant dwelling (Flip), I want to pull back the curtain on how this industry works and share how I handle insurance in my own life.
Why do rates always go up?
One of the most common misconceptions is that if you don’t file a claim, your rates should stay the same. Unfortunately, that is rarely the case. At a minimum, insurance rates generally keep pace with inflation. With the Federal Reserve’s target inflation rate at 2%, you should expect your premiums to increase by at least that much every year in perpetuity—even in a “perfect” world.
However, rates also depend on how accurately carriers predict the frequency and severity of claims. According to the Insurance Information Institute, about 5.53% of homeowners (1 in 18) filed a claim in 2023, with an average cost of nearly $17,000. The most common culprits are wind, hail, water damage (like a burst pipe), and fire.
If 94.5% of people don’t file a claim, why do everyone’s rates jump? It’s because of how risk is pooled. Carriers place you in a “box” with similar risks.
- Box A: Homes built in 2015 with tile roofs, stucco exteriors, and owners with high credit scores.
- Box B: 1950s block homes with shingle roofs and original galvanized pipes.
If those galvanized pipes start leaking across the country, the carrier pays out more than expected. To cover those losses, the rate goes up for everyone in that box, not just the individual who filed the claim. Sharing in losses is the fundamental tenet of insurance.
Why the sudden spike in recent years?
When inflation surged in 2022, it caught carriers off guard. The gap between what they expected to pay and what they actually paid was massive. Some companies were losing 20–25 cents on every dollar.
Arizona was hit particularly hard. Between 2021 and 2024, the typical Arizona homeowner saw their rates increase by more than $700. This was driven by a “perfect storm” of inflation, increased wildfire risk, and missed projections. The good news? As inflation levels off, carriers can predict costs more accurately, and we are finally seeing rates stabilize.
What is the average rate in Arizona?
The answer depends on which “box” you fit into. Factors like the age of the home, your claims history, and your credit score (which carriers use as a predictor for future claims) all play a role. Because of these variables, two neighbors can have wildly different premiums.
Current estimates for a $300k home in Arizona vary by source: Bankrate: $2,331, MoneyGeek: $2,602, and NerdWallet: $2,110
Generally, vacant homes cost the most to insure, primary residences the least, and landlord policies fall somewhere in the middle. In my experience, if you have good credit in Phoenix or Tucson, you’re likely looking at $1,500–$1,800.
What do I do as an insurance agent?
I’ll be open with you: I live in a rural part of Arizona (not a high wildfire zone) and pay $1,600 for a $350k home. Here is my personal strategy:
- I shop around every few years.
- I manage my deductible. I currently keep mine at $2,500 to lower the premium.
- I mitigate my own losses. When our water heater leaked recently, I didn’t file a claim. We cleaned it, dried it out, and hired a local contractor for the $5,000 repair.
- The $10k Rule: I generally will not file a claim for less than $10,000. I always get a repair estimate before calling the insurance company to ensure the damage significantly exceeds my deductible.
Is it time to shop?
If you haven’t compared rates in a couple of years, now is the time. Carriers are becoming “cautiously aggressive,” meaning they are offering competitive rates for the specific risks they want to bring onto their books.
Gila Insurance Group is a broker. We represent five of the top ten homeowners’ insurance companies, and we’re here to help you find the right “box” at the right price. To get a quote, visit www.GilaInsurance.com/azreia. We can help you with insurance for your auto, home, and investment properties.
Gila Insurance Protecting Investors
Real estate investing in Arizona is a high-stakes game of strategy and grit. Our market is wild—at times soaring, and at others, faltering. AZREIA gives you the tools to understand the market and the strategy to pursue; Gila Insurance Group protects you as you navigate your investor journey. Whether you are scaling a portfolio of single-family rentals or navigating your first fix-and-flip, the quality of your team determines your success. At Gila Insurance Group, we don’t just provide policies; we are active investors who understand the “Investor Life.”
As a proud supporter of AZREIA, we have built our agency around three core pillars designed specifically for the Arizona investor: Protect, Save, and Serve.
Protect: Guarding Your Portfolio
In the world of real estate, you are a target for lawsuits and unforeseen disasters. Standard “one-size-fits-all” insurance often leaves gaps in liability and personal injury coverage that can sink a business. As an investor, you are a business owner, and you should think like one. How are you protecting your business? Too often, investors seek the cheapest rate possible only to be stuck with large, uncovered claims that derail business plans and profits.
Gila Insurance specializes in the niches that “big-box” carriers avoid or treat as secondary products: rental properties, short-term rentals (Airbnb/VRBO), manufactured homes, and vacant rehab projects. We have been attending AZREIA events since 2014; we have seen different investing strategies discussed, implemented, and succeed. Having protected all sorts of investment models, we are ready to help you on your journey.
Save: Maximizing Your Cash Flow
We know that every dollar spent on insurance is a dollar taken away from your ROI. As an independent broker, we don’t work for an insurance company—we work for you. We shop your coverage across different top-tier carriers to find the most competitive pricing in the market.
Our commitment to saving you money doesn’t end at the closing table. We utilize advanced technology to monitor your rates year-over-year. If your premium spikes at renewal, our system flags it, and our team will review to ensure that you have the best price available.
Serve: The Heart of an Educator
We believe the best risk management tool is education. Because we own rental properties ourselves, we’ve dealt with the “crazy tenants,” the evictions, and the repair headaches. Ask me about my fourplex in Tucson—it was a nightmare! But we have also had rental properties that worked out beautifully. We approach every AZREIA member with the heart of an educator, helping you understand exactly what you are buying so you can make informed decisions for your business. From our online quote tools to our local, responsive team in the Gila Valley, we prioritize your convenience and peace of mind.
Ready to see how much you can save? Visit GilaInsurance.com/AZREIA to start a quote or download our Rental Property Insurance Checklist to ensure your portfolio is truly protected.
Loss of Rent Coverage: Your Financial Lifesaver in Stormy Times
Attention real estate investors: imagine a peaceful morning interrupted by a call from your tenant. Instead of a simple question about mail or a running toilet, you learn that a burst pipe has transformed your rental into an unintentional indoor water park. Suddenly, you are wondering who to call, how to get it fixed, if your insurance is current, and who is going to cover the rent while the property is repaired.
That is where Loss of Rent Coverage steps in. It acts like a financial safety net, helping protect your rental income when your property becomes temporarily uninhabitable due to certain types of damage.
What Loss of Rent Coverage Really Is
Loss of Rent Coverage is designed to reimburse you for rental income you lose when a covered claim forces your tenants to move out during repairs. Think events such as:
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Fire damage
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Storm or wind damage
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Burst pipes or other sudden water damage
While your property is being restored, your insurer can pay you the lost rent (up to your policy limits), so you can focus on repairs instead of worrying about cash flow.
What Loss of Rent Coverage Is Not
A common misconception is that Loss of Rent Coverage pays when a tenant simply stops paying rent or when you have a long vacancy. That is not what this coverage is for.
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It does not cover non-paying tenants
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It does not cover normal vacancy between renters
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It only applies when there is a covered loss to the property that makes it unlivable
In most cases, the loss of rent is tied directly to a claim for physical damage: a tree through the roof, a fire, or a major water loss that requires your tenants to move out for repairs.
How It Works During a Claim
When a covered loss occurs and your property becomes uninhabitable:
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The tenants move out temporarily or the lease may need to be broken.
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Repairs begin, which can take weeks or even months.
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During that time, you are not receiving rent, even though your expenses continue.
Loss of Rent Coverage can replace that lost income (usually up to your documented rent amount), often requiring you to provide a copy of the lease. It will not pay more than what you were actually charging in rent, but it can keep your real estate business moving while your property is out of commission.
Why Not Just Use an Emergency Fund?
Emergency funds are important, but Loss of Rent Coverage is designed to prevent a temporary setback from becoming a serious financial hit. Instead of draining your savings to cover mortgage payments, taxes, and repairs while also losing income, this coverage helps stabilize your cash flow.
Insurance exists to protect you from catastrophic financial losses. Loss of Rent Coverage supports that goal by helping ensure your rental income continues, even when life throws you an unwelcome surprise.
How Much Coverage Should You Have?
When reviewing your policy, make sure Loss of Rent Coverage is included and that the limit is realistic. A good rule of thumb is to have at least enough coverage to match one year of rental income, since repairs can take longer than expected.
Loss of Rent Coverage is one of the unsung heroes of real estate investing. It helps keep your finances afloat when your property cannot. Life happens—pipes burst, storms hit, and accidents occur—but with the right coverage, your rental income does not have to sink with it.