5 Factors to Consider When Insuring Your Business in Arizona

Arizona has been ranked one of top 10 fastest-growing states in America, with its population increasing by over 15% since 2010. Many credit this consistent growth to the economic and environmental factors that make Arizona unique, including a low cost of living, low tax rates, a good job market, limited regulations, and year-round warm weather.

These same qualities that have encouraged families to relocate to this Southwestern state have influenced many businesses to set roots in the region. In 2023 alone, Arizona’s economic development broke records by creating a projected 24,246 new jobs with an average wage of over $70,000.

At the same time, the state is considered among the best states in which to start a business in 2024, with residents ranking as the second most likely in the country to start a small business.

When it comes to insuring a business in Arizona, some of the factors that make the location so ideal to live and work in also might impact the types and rates of coverage you’ll need. Here, we dive into the five factors to keep in mind when insuring your business in Arizona.

Factor #1: Arizona’s Unique Industries & Coverage Options

Arizona is home to many businesses of all shapes and sizes. Among the most common in this state are small businesses, manufacturing organizations, and construction companies.

The type of company you’re insuring will determine the policies you require. For example, alongside basic policies like commercial property or cyber insurance, certain types of small businesses might need professional liability insurance or employment practices liability insurance.

Manufacturing companies in Arizona, however, have different risks than small businesses. Instead of the policies listed above, they may choose to put an emphasis on worker’s compensation due to the higher risk of injury in manufacturing jobs, or general liability insurance to help protect them if the product they’ve developed causes injury or illness after its released to the public.

Construction companies in Arizona have their own unique set of needs. Errors & Omissions (E&O) coverage for instance can protect them if a company gives a client incorrect information or makes promises that can’t be kept. Similarly, builder’s risk policies are crucial for any individual or company involved in construction projects.

Be sure to begin your insurance journey by evaluating what type of company you’re going to be operating in Arizona, and what unique coverage options that might require.

Factor #2: The Environment & Climate

Year-round warm temperatures aren’t just a nice perk for residents of Arizona. Businesses operating out of this state also enjoy very leveled, low-risk weather, a factor which has a bigger impact on insurance in the area than you might think.

First, from a potential-loss perspective, this climate is ideal. The risk of damage to commercial property, slip and fall injuries, and even accidents in commercial vehicles all decline in warm, dry regions, which can save money on claims and potentially lower premiums.

Similarly, Arizona is considered a low CAT state, meaning it has a lower frequency of catastrophic weather events compared to other regions in the country. Less chance of hail, tornados, hurricanes, blizzards, etc. is not only good for business in general, it also means the price of property insurance will be a lot more competitive here than in other locations.

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Factor #3: The Geography of Arizona

Arizona is also known for being a very widespread state. In fact, it was ranked the 6th largest and 13th flattest state in the country in 2023.

While at first glance this might not seem like an important factor when it comes to insurance, there are some aspects of the state’s unique geography businesses in the area should consider.

For instance, companies that employ fleets of commercial vehicles should consider how Arizona’s topographical landscape might impact the number of miles driven and the number of hours their employees will spend behind the wheel.

That radius of operations is going to factor in when you’re choosing your transportation coverage, as vehicle safety risks can increase drastically when employees are driving long distances.

Did You Know: Top insurance carriers like Central take stock of geographical risks like this, and develop loss control practices to help reduce and manage risk. Learn more about fleet management and loss control in commercial vehicles here.

Factor #4: Tailored Solutions for Diverse Businesses

Arizona is a unique state with an array of qualities that make insuring a business there a complex task. Be sure not to fall for easy, one-size-fits-all insurance solutions when shopping for the right fit, as these likely will not take the factors unique to the state or to your type of business into account.

Instead, be sure to work with a carrier or agent that is going to find tailored products that fit your exact needs, including the types and amounts of coverage you require. This is the only effective approach in ensuring you are protected in all the ways that matter.

Factor #5: Who You Choose to Work With

Choosing which insurance carrier to work with is perhaps the biggest decision you’ll have to make when choosing business insurance in Arizona.

To provide you with the quality of coverage you need, your carrier should first and foremost be familiar with the local market.

Carriers like Central, for instance, have a long-standing presence in Arizona dating all the way back to the 1940’s. “We’ve been a long, consistent partner for our agents and our policyholders across the state, which has given us a really unique and well-defined understanding of what businesses in the state need when it comes to coverage,” says Dan Sepas, Arizona Territory Sales Manager at Central.

Once you’ve found a carrier that really understands the complexities of the local Arizona market, it’s next important to consider a carrier’s financial stability. The AM Best Financial Strength Rating is a great way to determine how safe a carrier’s financial outlook is. For example, Central has earned an AM Best Financial Strength Rating of “A” (Excellent) with a “Stable” outlook in 2023—a rating many organizations were not able to achieve considering the difficult state of the industry.

Learn More About Business Insurance in Arizona

Considering relocating or starting a business in Arizona? Central’s exclusive team of hand-picked, local agents are ready to help you take the next step and get your business insured.

Get started by finding the closest agent to you, or visit central-insurance.com for more information.