Goal: Affordable Homeowners Insurance

Affordable homeowner insurance is a major concern for insurance companies and their customers. In recent years, the factors that determine the cost of insurance have forced premiums higher.

Cost Driver Number 1

Building Materials, Home Repairs: In recent years, increases in cost for lumber, steel, concrete and copper have significantly outpaced other products measured by the Consumer Price Index. Those price increases affect what insurers pay to repair and rebuild homes and the costs of satisfying those claims is shared by all homeowner insurance consumers.

Cost Driver Number 2

Water Claims: Insurers have paid more money to satisfy claims caused by water damage than any other single cause.

Cost Driver Number 3

Crime: Arizona continues to rank as having one of the highest crime index's in the United States. In its latest analysis of crime, the Arizona Criminal Justice Commission reported that Arizona's property offense rate was 36% higher than the national average in 2005. For every 100,000 people who live in Arizona, 5,168 are victimized by crime annually.

Cost Driver Number 4

Windstorms: Windstorms are an annual occurrence in Arizona, typically occurring during the "monsoon season." These strong winds, usually accompanied by hail or rain, cause millions of dollars of damage to Arizona homes each year. In 1996, one monsoon storm caused $160 million in damage to Arizona homes.

Cost Driver Number 5

Fire/Arson: The top five causes of home fires are cooking mishaps, heating equipment malfunctions, arson, faulty home-and-appliance wiring, and wildfires.

Wildfires have become more serious in recent years as increased development borders forests and deserts in a growing number of Arizona communities. Oftentimes, these unincorporated areas lack the necessary regulations to protect homes from wildfires.

Arson is also increasing. While it is a difficult crime to successfully prosecute, government statistics indicate arson may be responsible for a third of all home fires and in most of those cases, the homes are total losses.

Sources: Insurance Information Institute; Phoenix Fire Department; Office of Federal Housing Enterprise Oversight; Federal Bureau of Investigation; and U.S. Department of Labor, Bureau of Labor Statistics.