Arizona Property Study Guide

Arizona property law is built on one big contrarian idea — the market, not the regulator, sets the price — and one big absence: the FAIR Plan you’d expect in a wildfire state doesn’t exist. Those two facts, plus the surplus-lines rules that fill the gap, are the spine of this part of the exam.

Open competition — Arizona’s biggest rating surprise

Most students arrive knowing prior-approval and file-and-use systems. Arizona uses neither: it is an open competition state. Insurers file rates with the Director within 30 days AFTER the rates take effect — no prior approval, no waiting period. The filing is a record, not a request.

No FAIR Plan — the absence the exam loves

Here’s the counterintuitive one: despite wildfire being its defining peril, Arizona has no FAIR Plan and no residual property market of any kind. The only statutory mechanism is voluntary apportionment agreements among insurers, approved by the Director (ARS §20-395). A hard-to-place home finds coverage in the voluntary market, through DIFI’s published carrier resources, or in the surplus lines market — not in a state plan, because there isn’t one.

The perils — wildfire first, monsoon second

DIFI states flatly that wildfire is Arizona’s predominant risk, in both forested and desert wildland-urban interface areas. Behind it come monsoon storms with high wind and hail. And as everywhere, flood is excluded from homeowners policies — Arizona’s flash-flood exposure is handled through the NFIP or private flood market, which is why flood-selling producers owe the one-time 3-hour NFIP course.

Credit scoring — permitted, but fenced

Arizona permits insurance credit scoring in personal lines — auto and homeowners underwriting and rating — subject to regulation. Know it as allowed-but-regulated, not banned and not unrestricted.

Surplus lines — the pressure valve

With no residual market, surplus lines carry real weight in Arizona. Three testable rules: a surplus lines broker must already hold property or casualty producer authority; a documented diligent-effort search of the admitted market must come first; and the broker authority itself costs $1,000 on a new license.