Arizona Auto Insurance Rates
Whether you are shopping for auto insurance in Arizona for the first-time or you are replacing a current policy, one of your first priorities is finding the most competitive insurance rates.
In the state of Arizona, all vehicle owners are required by compulsory state laws to carry mandatory liability insurance limits on their licensed vehicles to avoid penalties. All drivers must carry Bodily Injury Coverage and Property Damage Coverage. Any other coverage option available in the state is considered optional.
While all drivers in the state are required to prove that they are financially responsible before they get behind the wheel, they do have the option to buy their insurance from any provider licensed to do business in Arizona.
With so many different insurance companies offering auto insurance products in the state, consumers should take advantage of the competitive marketplace and do their research to find the best possible rates without compromising their protection on the road.
Luckily, this guide can help you understand how your rates will be calculated and how to find the best auto insurance policy without sacrificing your level of protection.
You can always use the FREE comparison tool located at the top of this page to start your search for auto insurance.
How Are Rates Determined in the State of Arizona?
The state of Arizona has its very own Department of Insurance that strives to promote a strong marketplace and also to protect consumers when buying insurance products.
While the market is not fully regulated, some aspects of rate determination is regulated by the Arizona Department of Insurance in an effort to prevent predatory practices. When any company is applying for a license to do business in the state, they must present the Department with a rating filing that must be in compliance with the law and considered to be reasonable. This filing will include an explanation of load factors, which can raise rates, as well as claims ratios.
Once the rate filing is approved, the company can begin selling insurance based on the filing that was approved.
The moment that the company is interested in passing a rate revision, either to raise or lower premiums, the company must give the Department a description of the formulation of the new rates and a reason for the revision. The new rate formula cannot be used until the revision is approved because of change in inflation, change in medical costs, or operational expense increases.
Types of Factors that Affect Arizona Auto Insurance Rates
Now that you understand that insurance companies cannot simply establish their own rate formulations and charge policyholders whatever they would like, it is important to sit back and learn how many factors affect rate evaluations.
Insurance companies have a team of actuaries that will review claims filings and other statistics to determine which drivers are the riskiest based on the data that is presented.
Once they do this, they will create formulas that surcharge or discount premiums based on dozens of different pieces of information that is provided on an application for coverage. Here are some of the many factors that can affect your rates in a negative or a positive way:
Vehicle Classification
Many drivers mistakenly assume that a vehicle is rated strictly based on its age. While age can play a role in the rates, companies actually use what is called a Vehicle Classification code to determine how much to charge to cover a specific car. To assign a classification, the company will use data from prior claims where the vehicle was involved.
The data will be used to determine how much damage the vehicle causes in an accident and how much the vehicle costs to repair. If it is found that vehicle causes serious damage and costs more than average to repair, it will have an expensive class regardless of its value.
Some cars that are a popular choice for younger drivers have higher classifications because they are frequently involved in accidents.
Vehicle Usage
Another factor that can raise or lower premiums is vehicle usage. Usage simply means how the vehicle is commonly used on a daily basis. Arizona insurers use three different types of usage classifications: pleasure, commute and business.
Pleasure drivers drive around town for errands. Commuters drive to and from work or school. Business drivers will travel to multiple locations for business purposes.
Not each type of use presents the same amount of risk. Actuaries have done research and determined that drivers who drive for pleasure are less likely to get involved in an accident because they drive under less stress.
Commuters and business drivers are more susceptible to filing a claim because they drive during the 6-hour block that the National Highway Traffic Safety Administration has found that most fatal accidents occur.
Annual Mileage
It is not easy for a company to price rates based on how much you drive weekly. Instead, the company will use your estimated annual mileage to calculate your rates. When you are asked how much you drive on average, the agent is using this information to put you in a mileage rating bracket.
If you drive less than 5000, you may be eligible for a discount because you are less likely to file a claim than drivers who drive 10,000 or 15,000 miles per year. If you drive more than average, you will be placed in a more expensive rating band. Be sure to estimate your mileage the best you can.
Age and Gender
Age and gender are two factors that you cannot change, but they are still factors that can work for or against you. Statistics show that younger males and older males are more likely to get into an accident than females in their same age group. This is a group rating factor that you cannot change because the statistics have remained the same for years and years.
Age is yet another factor that can work for a driver or against a driver. Typically, drivers that are between 16 and 25 file the most claims. Then, the claims taper off and between 25 and 73, drivers tend to be more responsible and quicker to react behind the wheel. Once a driver reaches 74 or 75, they may pay rates similar to the rates that inexperienced drivers pay, even with a clean driving record.
Credit Rating
Your credit rating can do more than just disqualify you from getting a car loan, it can also affect your ability to find affordable auto insurance. In the state of Arizona, it is legal for insurance companies to use an applicant's credit information to determine how responsible you are as a driver.
Data shows that people who have high credit scores are less likely to file claims. Check your credit and be sure the insurer is only using accurate information when rating your policy.
Driving Record
Insurers will run your motor vehicle report to look for accidents, violations and claims that have been reported in all states. If you have a violation in a state other than Arizona and that state communicates with Arizona, this violation can affect your rates.
Most insurers will only consider violations that have happened in the past 36 months, but some companies will not offer you a Good Driver Discount if you have anything reported in the last 5 to 7 years.
Be aware of the fact that serious violations for DUI and reckless driving can be used for more than 3 years. You should know what is on your driving record and the driving records of all of your household members before you list your history on your applications. If you fail to list an accident or violation, you may be charged more than you were quotes.
Prior Insurance Coverage
You may be eligible for a discount off of your insurance if you have had continuous insurance for a specified number of years. While many think this is to reward drivers for obeying insurance laws, it is actually because the company knows that the carrier will report whether or not you have filed claims in the past.
How to Find the Most Competitive Rates in Arizona
Now that you know about several of the factors that can affect your rates, it is time to start comparing rates. The best way to find a competitive policy that does not put you at risk on the road is to retrieve quotes with several insurers. Provide your information, adjust the coverage based on your budget, and choose a policy from a reputable provider.
Consumers in Arizona have a right to find insurance on a budget. You also have a right to know just why you are paying what you are paying for mandatory auto insurance. Do not just continue paying high premiums for no reason and begin doing a comparison.
By comparison shopping, you can find a better policy at a better price. Enter your ZIP code into the FREE tool below to start now!