Where you live affects how much you pay for your homeowners insurance. A company called ISO -- Insurance Services Office -- provides insurance companies with information about insurance risk. ISO evaluates homes' fire risk based on the local fire-fighting capability, ranking communities or fire districts on a 1 to 10 scale. This number represents your "protection class." For example, a 10 indicates a rural area with no fire department or fire hydrants nearby, which is not good for your insurance rates.
If your home has a fire hydrant within 1,000 feet and a fire department within three miles, you're in good shape: Your protection class is probably at least a 5. If you're much farther away, you're unlikely to do better than an 8. ISO looks at other factors too, such as whether your community maintains the fire hydrants properly and whether the water supply is sufficient for fire fighting.
ISO's staff researches 44,000 fire districts across the country to gather information for its rankings. To figure out how well a city fire department responds to a call, ISO studies the city's telephone network, emergency dispatch systems and emergency-number listings in phone books. The number of operators at the dispatch center factors in, too. Staffers also find out what level of training and experience the fire fighters have and the quality of their equipment. If any of this changes -- if the city pays for newer, better equipment, for instance -- the protection class may change too.
ISO's research affects your policy in multiple ways. When your community or fire district has a 10 ranking, you may have a hard time buying coverage, because insurers don't want to provide too much coverage in high-risk areas. If you can find a policy, the premiums usually cost a lot more than premiums for city homes near hydrants and the local fire department. If your community's ranking changes, that's good for safety but not necessarily for your wallet. Insurers treat classes 1 through 4 as comparable fire risks, for example, so upgrading from 4 to a 2 may not help you.
Some insurance agents may try to draw your business by gaming the system: when calculating premiums they might plug in a smaller distance between your house and the fire hydrant. That way they can quote you a lower premium than an agent who uses accurate figures. If the company discovers the error, it may increase your rates, dock your claim for the back premiums you should have paid, or drop your policy. If the agent's rate offer seems too good to be true, it may be, so go over it very carefully.
- International Risk Management Institute: Protection Classes
- Insure.com: Homeowners Premiums Fluctuate With Community's Fire-Fighting Ability
- Insurance Service Offices: How the PPC Program Works
- William Avon Insurance Group: Homeowners Protection Class -- How Does the Wrong Class Affect Your Premium?
- ISO: How Does PPC Information Affect Individual Insurance Policies?
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