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The Impact of Improved Public Protection Classification Ratings on Homeowners’ Insurance Rates ... - page 1 / 9





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The Impact of Improved Public Protection Classification Ratings on Homeowners’ Insurance Rates in Richland County

Anna Berger, Mark Bondo, and William Tomes


City and county decision makers, whether they are elected councils, administrators, or budget directors, probably hear about maintaining or improving a community’s Insurance Services Office1 (ISO) rating from their fire departments on a regular basis—especially around budget time. Arguments used by fire departments are the savings to residential and commercial homeowners who buy insurance against fire damage for their property, and the ability to recruit new businesses by offering lower insurance rates through improved ISO ratings. Such conversations may lead to decision makers wondering, “What is an ISO rating?” and “What sort of savings would my residents receive if we had a better rating?”

The Institute for Public Service and Policy Research (IPSPR) was asked by Richland County and the Columbia-Richland Fire Service to help answer the above questions. This article addresses what ISO is, how ISO affects insurance rates for residential and commercial residents, and shows projected insurance savings for Richland County residential property as they received changes in their Public Protection Class rating. For a detailed explanation of the methodology and the results as outlined in the final report, please visit http://www.ipspr.sc.edu/publication_ele.asp.


It is a common misconception to refer to an area’s “ISO Rating” when talking about fire protection. Fire departments actually receive a Public Protection Class (PPC) rating. ISO refers to the Insurance Services Office, Incorporated (ISO), a company that issues PPC ratings and provides services pertaining to risk analysis. A PPC rating does not reflect the risk of property owners having fires; rather, it indicates the quality of fire protection in an area. A community’s PPC rating is a key factor that affects the cost of homeowner’s insurance and the cost of operating fire departments, particularly those trying to accomplish lower PPC ratings. Many different entities use ISO’s products to help mitigate and assess risk, including the insurance industry. Communities or fire districts receive a rating from one to ten based on this system, with one representing the highest quality fire protection and ten representing a system that does not meet ISO’s minimum criteria.

The following chart summarizes PPC ratings across the country and throughout South Carolina, prior to Richland County receiving its new ratings. There are relatively few departments that have achieved a rating lower than four.


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