Your insurer didn't pick the cost of your homeowners insurance premium out of a hat. The cost of your policy is based on things such as the value of your house and how vulnerable it is to fire. The Insurance Services Office has 10 protection classes that measure fire risk. Which class your home falls in can affect your insurance rates.
In the days when most buildings were made of wood, fire was even more expensive for insurers to cover than now. In the early 20th century, insurers began looking at ways to assess fire risks before they wrote the policy. In 1904, the National Board of Fire Underwriters developed an inspection and grading system to rate cities' fire-fighting and fire protection policies. Insurers used the same systems to measure the risk of insuring different homes. These earlier grading systems evolved into the 10 classes ISO uses now.
If ISO scores your house as a 10, that tells insurers you're in a rural area with no fire-fighting service and no hydrants anywhere near you. Cities earn their way into the higher protection classes based on their number of fire stations, how well equipped fire fighters are and how fast they respond to emergency calls. Your home's individual rating also depends on how close you are to a hydrant.
There's no hard and fast rule for how much your protection class affects your rates, because so many other factors are in play. States where windstorms can turn a fire into a federal disaster zone give more weight to fire than Florida, where such wildfires are rare. If other factors don't change, going from a Class 10 to a 5 can make a big difference to your rates. If you're already Class 4, moving up to Class 1 would have a much smaller effect.
If your protection class changes, it could be because your city has improved its fire-fighting ability. It could also be because your original agent made a mistake -- underestimating the distance to the nearest hydrant, say -- and now that it's fixed, your premium reflects the real risk. Some agents deliberately falsify homeowners' protection class to justify lower premiums and bring in more business. When the truth comes out, the insurer raises the rates or cancels the policy completely.
- International Risk Management Institute: Protection Classes
- Insurance Services Office: Origins of Public Protection Grading
- Insure.com: Homeowners Premiums Fluctuate With Community's Fire-Fighting Ability
- William Avon Insurance Group: Homeowners Insurance Class -- How Does the WRONG Class Affect YOUR Premium
- Stockbyte/Stockbyte/Getty Images