Historic home insurance in Arizona

At a glance

How historic home insurance in Arizona follows rebuilding cost, not market value

Arizona's Department of Insurance and Financial Institutions (DIFI) says dwelling coverage is based on replacement cost, not market value, and that labor and material costs can rise whatever the home's market value does. So the price you pay for a historic house does not set the limit you need.

Replacement cost and actual cash value on a historic home

Replacement cost is what it takes to rebuild or repair with materials of similar kind and quality, with no deduction for depreciation. Actual cash value is replacement cost minus depreciation. DIFI notes most standard policies cover personal property on an actual cash value basis, though replacement cost coverage can often be bought, and that policies often limit when claims are paid at replacement cost. Ask which basis applies to the house and which to its contents, and in what cases the policy falls back to actual cash value.

Inflation guard on historic home insurance

Building costs move. Verisk data cited by DIFI show average residential reconstruction costs in Arizona rose 6 percent from September 2022 to September 2023, and construction costs nationally rose more than 30 percent in five years. An inflation guard provision raises the dwelling limit automatically to keep pace, which helps you avoid being underinsured a few renewals after you buy.

Rebuilding a historic home under Phoenix HP guidelines

Phoenix's design guidelines for historic properties say to repair historic features rather than replace them, and where repair is not possible, to match the original in design, material, color and texture. Restoring casualty damage, with clear documentation, is on the City's list of work eligible for a Certificate of No Effect, except complete replacement of the roof structure. Ask the insurer whether its replacement cost estimate assumes like-kind materials such as steel casement windows, original brick or wood shingle, and keep photos of those features so a claim can be documented. The guide to Historic Preservation zoning in Phoenix explains the certificates.

Ordinance or law and other historic home insurance coverages to ask about

A few policy features matter more on an older house than on a new one, and each is worth a direct question when you compare quotes.

Ordinance or law coverage for an older home

DIFI describes coverage for "Increased Cost to Changes in Building Ordinances", usually called ordinance or law coverage. It pays for upgrades the building code requires when a damaged home is rebuilt, such as new plumbing or wiring standards. A house built in the 1920s or 1940s was built to the code of its day, so ask whether the policy includes this coverage and how high its limit is.

HO-3 policies on a historic home

The HO-3 is the most common homeowners policy. It covers the house, other structures and personal property against a broad range of perils. Most policies are written on an "all risk" basis, but they still exclude flood, war and neglect. Detached garages and guest houses at the rear of the lot, common in older districts, fall under other structures; ask what limit applies to them.

Home warranty versus historic home insurance

DIFI separates the two: a home warranty, or service contract, covers systems and appliances that wear out, such as an AC unit, while home insurance covers sudden, accidental damage. On an older house a warranty may be worth considering for the systems, but it does nothing for a fire or a storm.

Grant-funded historic homes and the City as additional insured

If you later take a City Exterior Rehabilitation Grant, the grant guide requires recipients to name the City as an additional insured on their homeowner's insurance. Tell your insurer early if you plan to apply.

What historic home insurance leaves out: flood, wear and slow water damage

DIFI warns that water from rain or snow inside the home may not be covered unless it came in through a roof or wall damaged by wind or hail, and mold and rot from water damage are typically excluded. Roof coverage generally applies only to the part damaged by falling objects, rain, snow or wind. Wear on an old roof is the owner's cost, which is why the inspection for a historic home in Phoenix should tell you the roof's condition before you buy.

Flood insurance for a historic home in Phoenix

Standard homeowners insurance does not cover flood damage. Flood coverage is a separate policy, mainly through the National Flood Insurance Program (NFIP), managed by FEMA. Homes in high-risk flood areas with a mortgage from a government-backed lender must carry it. NFIP residential building coverage goes up to $250,000 and contents up to $100,000, bought separately with separate deductibles. There is usually a 30-day wait before a policy takes effect, except when it is bought because a lender requires it or after a flood map change. Check the address on FEMA's Flood Map Service Center rather than assuming a zone.

The NFIP historic structure rule for a historic home

Under NFIP rules, "substantial improvement" means work costing 50 percent or more of the structure's market value, and it can trigger floodplain elevation requirements. The definition excludes alterations of a historic structure that do not end its historic designation. If a historic house sits in a mapped flood zone and you plan a large rehab, ask the floodplain administrator how this applies before you set the budget, and see the guide to historic home renovation loans for how the work can be financed.

Historic home insurance questions to ask before you close

Arizona has no statute requiring homeowners insurance, but mortgage lenders generally require it, and you do not have to use the insurer the lender suggests. More than 100 companies are licensed to sell homeowners insurance in Arizona, though not all are writing new policies in every area. Arizona uses a "use and file" rate system, so an insurer can use a new rate right away and file it with DIFI within 30 days.

Questions about the dwelling limit on a historic home

• How did you arrive at the dwelling limit, and does it reflect replacement cost rather than the purchase price?
• Does the estimate assume materials of similar kind and quality to the originals?
• Is there an inflation guard, and how much does it raise the limit each year?
• Is ordinance or law coverage included, and at what limit?
• What limit applies to a detached garage or guest house?

Questions about the roof, wiring and plumbing of an older home

• What do you need to know about the roof's type and age, and how will you confirm it?
• Do you ask about the type of wiring or the electrical service, and does the answer change the quote or the terms?
• Do you ask about the plumbing or the sewer line, and would any finding need fixing before you bind the policy?
• Which parts of a roof claim would be paid at replacement cost, and which at actual cash value?

Share the inspection report with your insurance agent early so the quote rests on the house as it is. DIFI also suggests saying you are making an "inquiry" when you only want to ask questions, because insurers review claim history for rates and renewals. Joe Janus can get the inspection reports to your insurance agent quickly so quotes come back while your inspection period is still open.

Arizona cancellation and non-renewal rules for an older house

Once a policy is in force, an insurer can cancel it mid-term with only 5 days' notice, and only for reasons set in law, such as non-payment, fraud, an increased hazard, a substantial change in the risk, or failure to fix conditions that raise the chance of a loss. For non-renewal, the insurer must give at least 30 days' notice before the policy period ends, and the same 30 days to make renewal depend on lower limits or removed coverage.

The right to cure a condition on an older home

If a non-renewal rests on a specific condition of the property that can be fixed, the insurer must tell you and give you a chance to fix it, usually within 30 days. If the fix is acceptable, the policy must be renewed. Before you hire anyone, DIFI advises checking a contractor's license with the Arizona Registrar of Contractors and an adjuster's license with DIFI.

Correcting wrong data on historic home insurance

If a non-renewal relies on inaccurate data, such as the wrong square footage or the wrong roof type or age, DIFI tells homeowners to ask the insurer for the data it used and send corrected information. DIFI's Consumer Protection Division is at (602) 364-2499 or insurance.consumers@difi.az.gov, and complaints against insurers can be filed there.

Insurance is one step in buying a historic home in Phoenix. If you are weighing a postwar house, the guide to mid-century modern homes in Phoenix covers the districts where those houses sit.

Historic home insurance in Arizona FAQs