The Auto Insurance Score Factor: Unraveling Arizona's Unique Approach

Arizona's auto insurance rates are influenced by factors such as age, location, and credit score. The state's average annual cost of full coverage is $2,547, while the average rate for minimum coverage is $755 per year. Arizona drivers with poor credit may pay over $1,000 more than those with excellent credit. The state's minimum auto insurance requirements include bodily injury liability coverage of $25,000 per person and $50,000 per accident, as well as property damage liability coverage of $15,000 per accident.

Arizona's average insurance costs

Arizona's insurance costs vary depending on the type of insurance and the level of coverage. Here is a breakdown of the average insurance costs in Arizona:

Car Insurance

The average annual cost of car insurance in Arizona differs depending on the level of coverage. For full coverage, the average cost is around $1,397 per year, while the state minimum coverage costs approximately $676 annually. These rates are slightly higher than the national average. Various factors influence car insurance rates in Arizona, including age, gender, driving record, credit score, vehicle type, and location within the state.

Home Insurance

The average cost of homeowners insurance in Arizona is approximately $2,414 per year, which is lower than the national average of $2,728. The cost of home insurance can vary based on factors such as location, proximity to wildfire zones, property age and condition, crime rate, and credit score.

Credit score impact on insurance

Credit scores can have a significant impact on insurance rates in Arizona. According to an analysis by insurance comparison site The Zebra, Arizona drivers with poor credit pay more than twice as much as those with excellent credit, even if they have flawless driving records. This can amount to an extra $1,500 per year on average, with the difference being greater in certain cities like Phoenix and Glendale.

In Arizona, a good credit score ranges from 670 to 739. A higher credit score is generally associated with lower insurance premiums because insurers perceive individuals with good credit as less risky to insure. They are believed to be more reliable in making prompt payments and are considered more responsible.

While credit scores play a role in determining insurance rates, they are not the only factor considered by insurance companies. Other criteria include age, gender, marital status, driving record, vehicle type, insurance coverage, and deductibles.

It's important to note that insurance companies use credit-based insurance scores, which differ from the credit scores used by lenders. These scores are designed to predict the likelihood of filing insurance claims that exceed the amount the company collects in premiums.

To improve credit-based insurance scores, individuals can take similar actions as they would to improve their credit scores, such as making timely payments, reducing credit card debt, and maintaining a good history of managing financial obligations.

While Arizona allows credit scores to impact insurance rates, some states like California, Hawaii, Washington, Massachusetts, and Michigan have strict limits or prohibitions on the use of credit information in determining auto insurance rates. In these states, credit scores do not influence insurance premiums.

Arizona's minimum insurance requirements

Arizona requires a minimum of $15,000 for bodily injury liability per person, $30,000 for bodily injury liability per accident, and $10,000 for property damage liability per accident. These figures were updated in July 2020 and are up from the previous minimums of $15,000, $30,000, and $10,000, respectively.

The state also requires a minimum of $25,000 per person and $50,000 per accident for both uninsured motorist bodily injury coverage and underinsured motorist bodily injury coverage. However, these coverages can be rejected by speaking to a licensed insurance counsellor.

The average rate of auto insurance in Arizona is around $42.39 per month, or $508.68 per year. The average cost for state minimum car insurance is about $56 per month, or $676 per year, while a full-coverage policy averages around $116 per month, or $1,397 per year.

Arizona is a tort state, meaning the person found responsible for an accident is held to be at fault. As such, No-Fault, Uninsured Motorist (UI), and Underinsured Motorist (UIM) are not legally required insurance coverages in Arizona.

Optional insurance coverage in Arizona

Arizona requires a minimum of 15/30/10 of bodily injury and property damage coverage. The average rate of auto insurance is around $42.39 per month. However, there are several types of optional insurance coverage that Arizona drivers can consider adding to their policies. Here is a list of optional insurance coverages available in Arizona:

• Physical damage insurance: This type of insurance covers the repair costs of your car in the event of a collision, regardless of who is at fault, as well as vandalism or theft. The maximum amount you can receive under this coverage is the current market value of your insured car. It's important to note that insurers usually ask for a deductible amount, which you must pay after each claim before the coverage takes effect.
• Uninsured/underinsured motorist (UM/UIM) coverage: UM/UIM coverage takes care of your bodily injury medical bills when the at-fault motorist is uninsured or underinsured. Similar to bodily injury (BI) coverage, there is a range of limits you can choose from. However, the UM/UIM limits cannot exceed the BI limits on the same policy.
• Medical payments (MED) coverage: MED covers your medical bills resulting from auto-related accidents up to a certain amount. This includes costs like ambulance rides, hospital visits, surgeries, and professional nursing care. While some Arizona residents may consider this coverage redundant if they already have health insurance, MED can reimburse the health insurance deductibles that need to be paid before that coverage kicks in.

In addition to these optional coverages, Arizona drivers can also consider increasing their liability limits for BI and property damage coverage. While the minimum coverage limits in Arizona are $25,000 per injured person and $50,000 per accident for BI, and $15,000 per accident for property damage, higher limits are usually available, depending on the insurer.

Arizona's financial responsibility law

• $25,000 for one person sustaining bodily injury or death in an accident
• $50,000 for two or more persons sustaining bodily injury or death in an accident
• $15,000 for damage to others' property

These limits are known as 25/50/15 coverage limits and are designed to provide a basic level of financial protection in case of an accident. Drivers must have evidence of current financial responsibility in their vehicle and produce it upon request by a law enforcement officer. Failure to do so can result in civil penalties, including fines and suspension of driving privileges.

The cost of car insurance in Arizona is influenced by various factors, including age, gender, driving record, credit score, vehicle type, and location within the state. Arizona is a tort state, which means that the person found responsible for an accident is held at fault. As such, uninsured motorist coverage is not mandatory. However, it is recommended to have additional coverage beyond the minimum requirements for more comprehensive protection.

Frequently asked questions