Will Your Homeowners Insurance Increase?July 2, 2009 - 3:05 PM | by: Brooks Blanton
If you have never heard of an ISO Rating, you might want to look into it. It’s an assessment of your fire department’s ability to protect your house and it directly affects how much you pay for homeowners insurance, no matter where you live. The recession has forced many cities and towns to cutback on fire department staffing and delay equipment upgrades. As a result, some fire departments have seen their ratings drop.
The City of Atlanta’s Fire Department recently saw its ISO Rating drop from a two to a four on a scale of ten. Although that may not raise insurance rates much here, Georgia State Insurance Commissioner John Oxendine is concerned the city is on a slippery slope and homeowners could end up paying for it. “When you start going to a four, five, six or seven, that’s when you are affecting homeowners,” Oxendine says. Although it varies among insurance companies, Oxendine estimates the two-point slide for the Atlanta Fire Department could cause some insurance companies to hike rates by 10 percent. He believes insurance rates would dramatically jump by 30 to 40 percent if that rating would to slide by an additional point, below a five rating.
Atlanta is not the only city struggling with fire department budget issues and ISO ratings. The same story is playing out in fire departments of all sizes from coast to coast. I found media reports showing concerns over fire department budgets and ISO ratings in places like Charleston, SC; Lafayette, NY; La Vern, TN and Naples, FL.
David Colmans is the Executive Director of the Georgia Insurance Information Services. He says the rating system is based on several factors including equipment, manpower, the availability of fire hydrants, communications, training and documentation provided at the time of inspection. “Your major fire departments tend to be in the class of two, three, or four. Then you get to the smaller fire departments, the volunteer fire departments. Then you start going up the ladder to ten which means there is no fire protection at all.
Bottom line, everyone says know your fire departments rating and how your insurance company might use it to determine what you pay. You can get that information through your cities public information office or by contacting your state insurance commissioner or fire marshal.