Rising Homeowner Insurance Costs in Arizona: Should You Drop Your Coverage?

Homeowner insurance costs are climbing rapidly, and many Arizona homeowners — especially those who own their homes outright — are considering dropping coverage altogether, a practice sometimes called “going naked” or self-insuring.

While self-insuring may be legal, it comes with serious financial risks, especially in areas like Sun City West, Surprise, and greater Maricopa County.

The Surge in Arizona Premiums

• Arizona home insurance premiums have jumped nearly 70% since 2019, one of the steepest increases in the U.S. (AZ Big Media)
• Average premiums are now $2,309/year statewide, with local variation:
• Sun City West: $1,934/year
• Surprise: $2,330/year
• Phoenix Metro: $3,150/year
  (NerdWallet, Bankrate )

What Self-Insuring Really Means

Self-insuring means you do not have a homeowners’ insurance policy. Instead, you personally cover:

• Damage to your home from fire, storms, or other disasters.
• Replacement of personal belongings.
• Liability costs if someone is injured on your property.

If your $400,000 home burns down, you pay 100% of the rebuild cost — plus legal and medical expenses if you’re sued.

Is It Legal to Self-Insure in Arizona?

Yes, Arizona law does not require homeowners’ insurance if you own your home outright. (DIFI Arizona)

However:

• Mortgages require insurance.
  Dropping coverage violates your mortgage agreement and may lead to force-placed insurance at a much higher cost.
• HOA rules may also require certain coverage levels.

The Dangers of "Going Naked"

While self-insuring may save money in premiums, it creates massive financial risk.

1. Catastrophic Losses
   Rebuilding after a fire or severe storm can cost hundreds of thousands of dollars.
2. Wildfire & Flood Risk
   • Sun City West has a moderate wildfire risk, higher than 57% of U.S. communities. (Wildfire Risk)
   • Flooding is rare but not impossible in Maricopa County.
3. Liability Costs
   If a visitor is injured, you may be liable for medical bills and legal judgments.
4. Future Coverage Challenges
   If you later seek insurance, premiums may be higher, or coverage could be unavailable in high-risk areas.

Local Perspective: Sun City West & Surprise

Source: NerdWallet, Bankrate

Strategies to Reduce Premiums Without Dropping Coverage

• Increase your deductible to lower monthly costs.
• Bundle home and auto insurance for discounts.
• Mitigate risks: install fire-resistant roofing, clear vegetation, and create defensible space.
• Shop around: insurers assess risk differently — compare quotes annually.
• Ask about local/state programs for hard-to-insure homes.

Final Thoughts

Self-insuring may be legal, but it’s not a decision to take lightly. With average premiums under $2,000/year in Sun City West, the cost of coverage is far less than the financial devastation of a catastrophic event. Before you consider going without insurance, talk to a trusted insurance professional to explore all your options.

Disclaimer: This article is for informational purposes only. Consult a licensed insurance professional for advice specific to your situation.