Mike Causey: Fire ratings affect homeowners’ insurance premiums

A couple of weeks ago, I was honored to receive an invitation to attend the Liberty Fire Department's ceremony announcing its new fire rating.

Liberty, a small town of about 2,700 residents located in northeastern Randolph County, received an ISO rating of 2.

ISO stands for Insurance Services Office. The Insurance Services Office provides a lot of rating, statistical and actuarial information to the insurance industry.

Fire departments are rated from 1 to 10, with one being the best. So, it's quite exceptional for a town the size of Liberty to achieve an ISO rating of 2.

I mention Liberty's status to emphasize how important a fire department's ISO rating is on your homeowners' insurance premium. A better rating can significantly lower your insurance premium.

While a number of factors come into play when determining a particular property's insurance premium, an ISO rating improvement of one point could result in a decreased premium. The amount depends on a number of factors, including where the house is located and the type of material used to build the house.

For example, improving from an ISO 10 to an ISO 9 or better could result in significant savings on insurance premiums. Going from an ISO 6 to an ISO 5 or lower doesn't usually result in a significantly lower premium.

However, when it comes to business and commercial insurance, policyholders are likely to see an average 8.5% decrease in premiums for each point improvement, all the way down to an ISO 1.

A lot of factors go into a fire department's ISO rating. Response time is a big factor. The faster a fire truck can get to your house, the more likely the firefighters will be able to prevent property damage and, more importantly, injury and loss of life.

Other factors include a fire department's availability of water to fight fires, the number of firefighters who respond, on average, to fire calls and the quality and maintenance of the fire department's equipment.

Getting a good ISO rating is never an accident. And it's almost always a community effort, requiring a lot of cooperation by neighboring fire departments and local officials. It often takes significant financial investments by local governments, fire departments and communities.

A big thank you goes out to all the firefighters, local officials and residents who through their hard work and financial support make their communities safer, and many times, make the insurance premiums in their communities a little bit less expensive.