With such a high financial investment at stake, it is important to understand what risks your home may be exposed to, and how those risks may affect the cost or scope of your homeowners insurance policy. A homeowners insurance premium is affected by a lot of factors, some of which include:
- Roof condition
- Construction of home
- Age of home
- Replacement cost
- Flood risk
- Marital status
- Specific ZIP code
- Crime rates in your area
Another variable is fire risk, and of all the factors, it is a big one. From 2014-2018, it was estimated by the National Fire Protection Association that insurance companies paid $7.2 billion in fire related property damage.
Many people think fires are unpredictable, and often, that can be true. What is not unpredictable is the likelihood your home may be extensively destroyed in the event of a fire. Depending on the construction materials and contents of your home, among other factors, the damage from a house fire can be catastrophic very quickly.
There are many data points to consider when it comes to house fires, such as your home’s proximity to fire hydrants and fire stations. These variables have the ability to drastically affect what you pay for homeowners insurance. When it comes to considering these factors in determining your insurance premium, home insurance companies use what is known as an ISO rating.
What is an ISO fire rating?
An ISO fire rating is a score provided to fire departments and insurance companies by a company called ISO Mitigation. The score reflects how prepared a community and area is for fires. While it mainly focuses on the local fire departments and water supply, there are other factors that contribute to an area’s score
An ISO score has the power to affect your insurance premium, and can even cause an insurance company to deny you service altogether in some circumstances.
How an ISO fire rating is determined
The ISO states that there are four categories that account for the scoring model no matter where in the U.S. your home resides. Each carries a specific weight and reflects a different aspect of fire prevention.
|50%||Fire department: The overall health of a fire department is assessed in this category. Factors ISO looks at include: training, number of employees and volunteers and maintenance and testing of crucial equipment.|
|40%||Water supply: ISO evaluates the following questions; does a community have enough water and water access for fire departments to use for fire suppression; How many fire hydrants are there; how much water is available after daily consumption?|
|10%||Emergency communications systems: This evaluates how well a fire department receives and responds to emergency calls.|
|5.5%||Community risk reduction: Any extra practices a community develops are recognized in this category. Includes fire safety education, fire prevention techniques and fire investigation. (ISO considers these points to be bonus points.)|
The highest score an area can receive from ISO is a 1, while the lowest is a 10. While the biggest category is the fire department, which accounts for 50% of the score, the hardest to improve is an area’s water supply. A lack of fire hydrants and access to an adequate amount of water cannot be easily remedied and would require extensive infrastructure development to fix.
It is possible your insurance application would be denied based on an ISO report, but many companies only use ISO for part of their calculations. Should you be unable to get a policy with one company, you may be able to submit applications to other home insurance providers. Not all companies will deny you service due to your area’s ISO score.
How does an ISO fire rating affect insurance rates?
In 2018, fire and lightning accounted for 32.7% of all homeowners insurance losses, according to III. It is for this reason that insurance companies continue to take fire safety very seriously when calculating a premium, and is why they use ISO scores to determine how at risk your home is.
If your fire department has a strong score from the ISO, this suggests to your insurance provider that the likelihood of your home being destroyed by a fire is low. It could still happen, of course, but the chances are not as high as they could be if you lived somewhere with a poor ISO score.
Homes are located in an area that has a poor score from the ISO, may result in a higher premium to reflect the greater risk companies take on by insuring the home. However, some companies may not even look at ISO scores and instead rely on other data to determine risk.
An ISO score is only one aspect among many that insurance providers look at. Other factors they consider include such things as:
- Flood risk
- Sinkhole risk
- Earthquake risk
- Tornado risk
- Hurricane risk
- Crime risk
To complicate it even further, each company uses its own pricing algorithm to determine how much a customer will pay for protection. Because there are so many differences between every company, homeowners may benefit from comparing quotes from multiple providers. Each provider is dramatically different in how it deals with risk-factors, especially those revolving around fire.
How do I find my home’s ISO rating
Your home does not have its own unique ISO fire department rating; the area in which it is located does. This means that you and your immediate neighbors should have the same ISO insurance ratings.
Further, your area’s ISO rating is only given to your local fire department. It is usually not public knowledge unless the fire department makes it public through a community awareness or other type of program or initiative. Some fire departments will provide your area’s rating if you give them your ZIP code, but they are not required to do so and may deny your request when you call.
If you are unable to inquire and determine your area’s ISO score, there are other ways to calculate how at-risk of a fire your home is. You can get an idea by studying the NICC’s interactive map of the United States, or the National Park Service’s interactive wildfire history timeline— both are quite extensive and informative. While this information may not help improve rates with your insurance company, it may help provide context for choosing a carrier or discussing coverage options.
- ISO scores are usually not available to the public unless publicized by the fire department.
- ISO scores revolve around areas and are not house specific.
- A score of 1 is the best score an area can achieve, while a 10 is the worst.
- Some insurance companies don’t use ISO scores when calculating a premium.
- Each insurance company uses data received from ISO in a different way.
- If you are denied a policy because of an ISO score, you may be approved by a different provider.