ISO PUBLIC PROTECTION CLASSIFICATION (PPC)
WHAT IS ISO?
Every Fire Agency within the United States is rated by an independent risk assessment and standards authority for the purposes of establishing insurance policy premiums for homeowners and businesses. The vast majority of States utilize the Insurance Services Office, or ISO, for this purpose.
HOW ARE PPC’S DETERMINED?
The Insurance Services Office evaluates four broad categories of fire suppression when establishing a PPC. These categories include: 1) Fire Department; 2) Emergency Communications; 3) Water Supply; and 4) Community Risk Reduction.
ISO routinely conducts assessments of each fire agency in the United States. Their stated goal is to re-assess once every five years. They have struggled, until recently, to meet this self-imposed cycle. The rating scale from best to worse is One (1) – Ten (10). There is a possible score of 105.5 points from the total of the four categories listed above. An agency needs a score of 90-105.5 to receive a PPC of Class 1.
WHAT IS TFPD’S PPC?
The Fire District recently received the 2016 findings from the ISO which resulted in a PPC of 1, putting the District among the top 0.3% of communities nationwide.
HOW DOES THE PPC IMPACT MY COMMUNITY?
Owners of residential homes and property, as well as owners of commercial buildings are impacted by these ratings that are established by agencies such as ISO. They are the basis of how insurance premiums and policy coverages are established, and how many insurance companies compete to offer insurance premiums.
Insurance Carriers use a community’s Public Protection Classification rating to: 1) identify opportunities for writing new business; 2) manage the quality of community fire protection across their business lines; 3) review loss experience in various rating territories; and 4) offer coverage and establish deductibles for individual homes and businesses.
In general, improving Classifications results in lower insurance premiums for our commercial occupancies. For residential homeowners it most often does not directly offer lower premiums but results in more competition for insurance and that can result in lower premiums.
Insurance companies — not ISO — establish the premiums they charge to policyholders. The methodology an insurance company uses to calculate premiums for property insurance may depend on the insurance company’s fire-loss experience, underwriting guidelines, and marketing strategy. The Tiburon Fire Protection District, as well as the ISO, cannot predict how each insurance company incorporates PPC information into its pricing structure, so it’s difficult to generalize how an improvement or deterioration in PPC will affect individual policies.
But here are some general guidelines to help you understand the benefits of improved PPC ratings for residents and businesses:
- PPC may affect availability and/or pricing for a variety of personal and commercial insurance coverages, including homeowners and commercial property (including business interruption).
- Assuming all other factors are equal, the price of property insurance in a community with a good PPC is lower than in a community with a poor PPC.
PLEASE CONTACT YOUR INSURANCE PROVIDER FOR INFORMATION ON HOW YOUR COMMUNITY’S ISO PPC MAY AFFECT YOUR INDIVIDUAL POLICY OR POLICIES.