Home, business owners may see insurance increase with ISO changes
by Jessica Loeding
Dec 28, 2013 | 3242 views | 0 0 comments | 32 32 recommendations | email to a friend | print
Bartow County and Cartersville residents may see their property insurance increase depending primarily on how far they live from a fire station and the distance of a fire hydrant from their property. SKIP BUTLER/The Daily Tribune News
Bartow County and Cartersville residents may see their property insurance increase depending primarily on how far they live from a fire station and the distance of a fire hydrant from their property. SKIP BUTLER/The Daily Tribune News
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Although portions of the ISO’s Public Protection Classification (PPC) restructuring took effect in July, home and business owners in 2014 may feel the effects of the revisions in the form of higher insurance premiums.

Earlier this year, ISO announced revisions both to modernize and enhance its Fire Suppression Rating Schedule and to restructure property rating rules to recognize a revised PPC structure, the company said in a January statement. ISO works with insurers, reinsurers, agents and brokers, insurance regulators, risk managers and participants in the property or casualty insurance marketplace.

Locally, Bartow and Cartersville fire departments saw the impact of the revisions.

“They’ve totally revamped the grading schedule on how fire departments are graded,” Bartow County Fire Marshal Bryan Cox said. “There’s multiple facets to this grading schedule. It covers everything from the type apparatus we use to the type equipment we use, hydrants, water mains. It just don’t encompass the fire department. It’s water systems, even roads, access to buildings, sprinkled, non-sprinkled buildings, all this stuff comes in, construction of buildings, the type of occupancies that are in these buildings. All this stuff is figured in.”

On the fire rating schedule, ISO assigns a PPC from 1 to 10 — class 1 represents superior property fire protection and class 10 an area where the fire suppression program fails to meet minimum criteria. Under the rating system, Cartersville Fire Department is a class 3 and Bartow County a class 5.

“The PPC has long been recognized as a pillar of property insurance where reliable, up-to-date information about a community’s fire protection services has been proven to correlate directly to underlying risk,” said Kevin Thompson, president of ISO Insurance Programs and Analytic Services, in a release.

“During development of the new edition of the FSRS, we examined commercial property and homeowners loss experience,” he added. “Based on the results of that analysis, we plan to introduce new categories within the PPC structure to recognize favorable loss experience for certain communities, relative to split classifications, that reflect the reduced loss potential when compared to single-class communities.”

With the ISPO’s split classification — BCFD is a 5/9 — properties may vary in class because of their distance from a fire station or distance from a recognized water source.

“To get a class 5, which in the middle of that rating which reduces the cost of your property insurance, your structural insurance for loss, is based upon: If you are a 5, you have to live within five road miles of a fire department and have a hydrant that flows a minimum of 500 gallons per minute within 1,000 feet of the structure through an approved route. That approved route is up the driveway, the way the fire truck would come,” Cox explained. “If you live within five miles and you do not have that hydrant within a thousand feet, you’re a 9. Dollarwise, a 1,800-square-foot, ranch-style home in Bartow County — that don’t have any unique features or anything against it — [at the] same address, if you’ve got that hydrant with 1,000 feet of the structure then you’re going to pay roughly, ball park, somewhere $900 to $1,000 a year homeowner’s insurance. That same house inside the five miles but don’t have the hydrant then you’re going to pay about $200 to $400 more a year.

“If it’s 5.1 miles from the fire station out to your residence, no matter if there’s a hydrant there or not, you’re going to a class 10. That’s going to either double or triple your homeowner’s [insurance premium].”

Using GIS and satellite mapping, Cox said, ISO can determine a property’s distance from a hydrant and station to within 5 feet.

In one case since July, the fire marshal said a home owner petitioned to have the distances re-evaluated because of the increase in her insurance.

The home was 836 feet from a hydrant but 5.1 road miles from a station. According to Cox, the insurance on the 1950s-era home went from roughly $800 to $1,600 after the property failed to meet the necessary criteria under the new ISO revisions.

Although some property owners have already been hit with changes, the ISO said the revisions will take effect in 2014.

“We’ve seen it already but we are going to see an increase in this. ... Every property in the United States is getting re-evaluated. So you may see no change or you may see some change, depending on how it lays out,” Cox said. “... Where this is going to get is in our rural areas. If you live much like a lot of folks have built their house off the road because they want to live secluded and stuff, if you’re more than 1,000 feet from a hydrant you’re going to pay a higher premium, no questions asked.

“... You may have been getting the friends and family discount from your agent because you’ve been a good customer all these years. It’s kind of taking it out of the agent’s hands because the agent could mark something on paper — not that they were being fraudulent or anything — but, ‘OK, that’s such-and-such. They’re good. I know that area. They’re good,’ without even going and checking. Now ISO on random is going to pull up policies and they’re going to check. So you may get hit and audited and you may not. But the more rural areas is where we are going to see this increase.”

While CFD equips four stations and 1,446 fire hydrants, BCFD, which also covers the remaining municipalities, mans 14 stations and 4,000 hydrants.

“We know there are some issues as far as coverage area in the Barnsley area, from station 7 to station 10. We know we’ve got some areas in other places in the county. It’s not just north; there’s some places in the south,” Cox said.

The revisions will impact the county’s recommendations for short-term, mid-term and long-term strategic planning for stations, equipment, manpower and even emergency dispatch.

“There is a lot of information coming in. What we have to try to do as a fire department and as a county government, we have to try to sift through, prioritize and then break down to where we can achieve things,” Cox said. “There are some things that, financially, are just not attainable right now and we realize that. So, we have to say, ‘OK, where can we get the most for our money to make this system work the best we can?’

“The other unique creature we have in Bartow County is ... we have multiple water systems that supply municipal water to our county and to our residents. ... We not only have the unincorporated county that we provide fire protection for but we’ve got all the other municipalities that we provide fire protection.”

The county’s mid-term goal — roughly within the next 10 years — is to bring the ISO rating down to a 3, which will help the tax base. The scattered municipalities and pockets of growth across the county will dictate equipment and manpower needs. Currently, a basic fire engine costs $350,000 to $400,000. An aerial device — or ladder truck — clocks in at a cool $1 million.

“We have to say, ‘Is it financially feasible for the county right now to run out and purchase X number of aerial devices and put them here, there and here, and staff them to get full credit?’” Cox said. “We’re talking millions and millions and millions of dollars. Or [do we] take a hit on the grading schedule? ... Because ultimately it’s coming back, both sides of this is going to come back to the property owners. Either they’re going to pay a little bit more in their insurance premiums or either — the money’s got to come from somewhere — either the taxes are going to go up. And everybody hates that word.”

For property owners affected by the ISO revisions, contact your insurance agent with questions. Agents may petition ISO for re-evaluations.