Factors Affecting Car Insurance Premiums in Arizona  

December 28, 2022
insurance agent showing calculator to client

Good news, Arizonians: You live in a state with a monthly auto coverage premium that is below the national average. With a typical annual cost of around $1,600 for full coverage, Arizona drivers are sitting pretty, especially when compared to the three most expensive states: Delaware at $2,700, with Louisiana and New York not far behind at just over $2,500. That’s right, you could save around $1,100 per year just because of where you live. As if you needed another reason to love having a residence in the Grand Canyon State. 

If you’re wondering why you pay so much less for car insurance, several factors play into the equation. At the end of this article, we’ll talk about some overlooked reasons you might not know about. For now, let’s start with the basics and explain how you can pay less for a state-required minimum policy or slightly more for full coverage. The choice is yours — take a little risk or enjoy total peace of mind. 

What Are Your Options for Coverage in AZ? 

The state requires that every motor vehicle operated on state roads be covered by liability insurance through a company that is authorized to do business in Arizona. Having said that, you have a wide variety of options available. 

  • Non-Owner State Minimum 

If you don’t own a car, congratulations. You won’t have a monthly finance or lease payment, which can be a tremendous boost to your finances. However, you still need coverage if you intend to operate a vehicle. 

You might choose to rent a car periodically or borrow someone else’s instead of owning one. If that’s the case, your best option is to pay for a non-owner product, which is around $386 per year. 

Accidents happen. Even worse, sometimes they happen with someone else’s car. If you’re driving your friend’s vehicle and get into a collision, the state minimum for a non-owner will provide recourse for property damage or personal injury to other people after the owner’s policy is maxed out. It costs a little over a dollar per day and could prevent you from serious financial hardship. Downsizing your coffee in the morning from a super large to a large one will be enough to pay for it. If you don’t want the expense of buying or leasing an automobile, but still want to drive one fairly often, you should consider this option. 

  • Owner State Minimum 

Most of us can’t go without having access to transportation waiting for us in our driveways and garages. Still, if you must own an automobile but don’t want to pay for anything exorbitant, you can opt to pay the state minimum for an owner. In Arizona, this is called a 15/50/25 plan and will only cost about $100 per year more than the non-owner policy. 

The plus side of this plan is that you pay very little. A downside is that it is the bare minimum you need to legally get on the road. It will only pay for up to $15,000 in property damage, which won’t even amount to the price of a replacement vehicle. This plan will also only cover $25,000 in personal injuries for one person and $50,000 for two or more in an accident caused by you. If you cause a particularly bad collision with liability only, you could still be on the hook for a big enough financial burden to impact the rest of your life.  

And remember, this type of policy pays nothing toward your own injuries and damages. You’ll need to recoup that from the at-fault driver’s policy or in the case of an accident that is your fault, out of your pocket. 

  • 50/100/50 Liability Only 

A 50/100/50 liability-only plan means you are still only insured to pay for the other driver’s costs related to property damage and bodily harm. If you cause the accident, you will still receive nothing to reimburse you for your expenses. The only difference here is that the amount the other party can receive is increased to $50,000 for medical expenses for one person, with a maximum of $100,000 for two or more, and $50,000 in property damage. Arizona residents pay about $700 per year for this package. 

All the policies mentioned above are liability only, meaning if you are deemed “at fault” for an accident, you will not be paid for any damage to your vehicle or personal injuries.  

Of course, even in this seemingly more comprehensive option, one wrong turn could institute immediate financial hardship. Medical bills add up quickly. What happens if you select this option and cause $300,000 in healthcare expenses for the other driver and their passengers? Your insurer would pay for the first $50,000. The remaining $250,000 would be up to you. Keep in mind that some of these unfortunate incidents can result in several hundreds of thousands — or even millions — of dollars in ongoing medical care. 

  • 100/300/100 Liability with $500 Comprehensive/Collision Deductible 

This policy increases the liability coverage by quite a bit. In this example, your insurer would pay for up to $300,000 in healthcare bills for two or more people.  

By adding comprehensive coverage with a $500 deductible, you add the ability to get reimbursed by your Arizona insurance provider for your expenses related to property damage as well. The $500 deductible means that you need to pay the first $500 in damages to your automobile. After that, the insurer pays the remaining costs to fix your vehicle. If you’ve paid any repair bills for your vehicle lately, you understand that most mechanical problems get well into the thousands of dollars to fix. 

The price for this auto coverage in Arizona averages around $1,600 per year. Do you think it’s worth the extra money to know you’re covered for your losses as well as those of other drivers? What about the potential of serious financial stress due to paying for an unfortunate accident?  

In the long run, some sort of comprehensive coverage seems well worth the added premium. Also, most companies will present a wide range of options for deductibles. For example, you could choose a $250 deductible and pay slightly more or choose up to a $1,000 deductible for a lower rate. 

person calculating insurance premium with calculator and documents at desk

What Other Factors Could Affect Arizonians’ Premiums? 

Besides your liability limits, what other factors play a role in setting your car insurance premium in Arizona? Let’s start with an old business adage. You know how they say the three most important factors in a new business’s success are location, location, location? Well, even the individual city within which you live has a great deal of influence on how much you’ll pay for car insurance in Arizona or anywhere else. Take a look at the following differences in average annual rates (rounded) by city: 

  • Phoenix –  $2,000 
  • Tucson –  $1,700 
  • Yuma – $1,500 
  • Flagstaff –  $1,300 

As you can see, the rates vary quite a bit depending on your city or town. What factors contribute to this variance in premiums? There are several, including the number of reported accidents, the likeliness of vehicle theft, and the presence of vandalism. With those things in mind, it’s easy to understand why big cities usually come with big prices. 

Many other factors go into determining a car insurance premium, such as age, gender, credit score, anticipated mileage, driving experience, driving record, claims history, marital status, and previous coverage. 

Some of those factors may seem arbitrary, such as marital status. But insurers have employees called underwriters who determine which clients are more likely to file claims for exorbitant repairs or healthcare expenses. Some of these items have interesting thoughts behind them. 

The Thinking Behind Premiums  

Age is a strange risk factor. People in their 20s are usually seen as an increased risk, as well as people over the age of 65. So, the sweet spot is those years between 30 and 65. Also, female drivers generally pay a lower premium, settling the age-old debate about which gender is the better driver. It’s obviously a myth that males are better vehicle operators because they pay more for their automobile insurance. Sorry, boys. 

Credit score and marital status are two items that don’t seem relevant to the discussion, but they are. Insurers point to studies that show people with better credit tend to drive more safely – and pay their bills on time. The psychology of it makes sense. If you’re more responsible with your money, you’re probably more conscientious behind the wheel as well. Similarly, married people often have children in the vehicle who make them much more aware of the potential dangers involved with every left turn and each lane swap on the highway. 

Find Affordable Auto Insurance in Arizona Today 

If you’re looking for affordable car insurance in Arizona, contact Oasis Insurance at 800-330-5190 or visit our website today for a free quote. We can personalize your coverage options to get you the insurance you need that fits your budget. 

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