In 2017 the Ridge Road Fire District achieved and Insurance Service Organization (ISO) Public Protection Classification (PPC) rating of 2. The district is just one of 20 fire departments in New York state to carry an ISO class 2 rating.
According to ISO, by classifying communities ability to suppress fires ISO helps the communities evaluate their public fire protection services. While Public Protections Classifications is not used to directly set insurance premiums, insurance companies do factor it in when setting their premiums. Generally speaking, a lower PPC rating means lower premiums.
ISO’s PPC information plays an important part in the decisions insurers make affecting the availability and price or property insurance. In fact, virtually all US insurance companies, including the largest ones, use PPC information in one or more of the following ways:
- To identify opportunities for writing new business
- To achieve a reasonable concentration of property risk
- To review loss experience in carious rating territories
- To price policies, office coverage and establish deductibles for individual homes and businesses.
Insurance Companies, not ISO, establish the premiums they charge to policyholders. The methodology a company uses to calculate premiums for property insurance may depend on the company’s fire loss experience, underwriting guidelines and marketing strategy. ISO doesn’t know how each company incorporates the PPC information into its pricing structure, so it is difficult to generalize how an improvement or deterioration in a PPC will affect individual policies.
But here are some general guidelines to help 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 coverage, including homeowners, mobile home, and commercial property coverage.
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.
