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What is an Insurance Protection Class for a Homeowners Policy?

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What is an insurance protection class and how does it affect my homeowners insurance price?

At some point you’ve probably sat down with your homeowners insurance policy, and on the front page of the insurance declarations you saw a small notation with a number next to it called ‘Protection Class.’  What is an insurance protection class?  How does it affect my rate?  What does a protection class mean?

What is an insurance protection class?

An insurance protection class is developed by ISO (Insurance Services Office) and ranges between 1 (best) and 10 (worst).  Also known as a ‘Fire Protection Class,’ it is based on your distance to a water source, how quickly the nearest fire department can respond in the event of a fire, and what equipment they have.  Class 1 is the best fire protection available, while Class 10 means that there is very little fire protection available.

Here are some of the things they’ve historically looked at:

  • What kind of trucks do they have?
  • How many trucks?
  • How much water can the trucks hold?
  • How much water can they pump per minute?
  • How close is the house to a fire hydrant?
  • How many firemen are employed?
  • Are they employed or is it volunteer?

They have evaluated the layout of the land in the past and has scored each area accordingly.  Depending on what area your home is located in, that will determine your score.  Changes happen from time to time as towns and cities expand, but it’s been a stable concept.

How does an Insurance Protection Class affect my rate?

Prices generally increase as you move from Protection Class 1 to 10.  Classes 9 and 10 tend to indicate that you are in the country, meaning it may take a little longer for the fire department to get there so your insurance rates may be higher as a result.  In fact, there may be some insurance companies may shy away altogether from Classes 9 and 10.

That said…

Is this really the best way to be scoring things anymore?  Hasn’t technology improved to a point where we can get faster response?

Some insurance companies are looking very closely at this.  They are considering other factors to determine the real risk of a total loss and weighing them along with the Protection Class to determine the true risk.  They understand that as technology, data and information improves, so does speed and precision.

These companies are using alternative means to calculate the risk level by evaluating the distance to the primary responding fire station and the quality of the water supply.  One company our agency works with has come up with their own system by doing this.  Instead of rating the location by classes 1-10, they have only three ratings that are to be applied to the property:  Protected, Partially Protected, and Unprotected.

The idea is to be more accurate in calculating the likelihood of a severe fire loss.  The Insurance Protection Class is still listed on the policy forms, but only as a ‘backup’ rating element for analysis and for situations where the new rating cannot be returned.  Overall, since this company decided to switch to this method, it’s been more beneficial to those on the outskirts of a town or city, or just out far enough that under the PC class they may have been classed as a PC-9, but are now listed as ‘Partially Protected.’

Not every insurance company has made the decision to consider other factors into their rating systems yet regarding insurance protection classes, but it’s something to keep your eye on – especially if you live in the country and have no intention of every moving into the city.  These things are always changing so it’s good to review your policy with your agent every year to see what the best situation is for you.

Course of Action:  Check with your agent to see if your homeowners insurance carrier is using traditional Protection Class valuations to determine your home’s level of risk, or if they’ve started incorporating other factors into their protection ratings.  Find out which is best for you.  If you’re unsure or if you’d like to reevaluate entirely, click here for a quote with our agency.

Why Do My Auto Insurance Rates Keep Going Up Even Though My Car Keeps Getting Older?

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Why do my auto insurance rates keep going up even though my car is getting older?  At Ovation Insurance, many of our clients ask this question so I would like to address it from a couple of angles.

First things first, even though it’s called car/auto insurance, it covers more than just your car. It should technically be called “auto-owners” insurance, similarly to how home insurance is actually called “home owners insurance”.

It’s important to understand that there are a lot of variables that go into insurance premiums, and with auto insurance, it’s no different.

The insurance company is much more concerned with you crashing into someone and causing them (or yourself) bodily harm, or death, than they are about your car. A car is a material possession which can be replaced.

A human life is not.

When is the last time you looked at your auto insurance policy?
If you look at it you’ll notice there are a lot of different coverages on your auto policy.

Bodily injury
Property damage
Un-insured motorist
Under-insured motorist
Medical Payments
Loss of Income
Funeral Expense
Loss of use
Rental Reimbursement

These are all things that you are covered for on your auto policy. How many of them have to do with your car?

None.

How many of them have a price next to them on your policy?

All of them.

Your car isn’t the only thing you’re being charged for on your policy
That’s because auto insurance covers far more important things than your car as mentioned above.

Let me re-phrase that: your car insurance rate isn’t just based on your car.

You’re not the only one…
It’s also important to understand that you are not the only person your insurance company insures. You are one fish in an ocean of other fish, sharks, and sea creatures, all who have different characteristics and risk profiles.

Insurance is all about spreading costs over a large number (risk pool) of people, which each person paying their fare share. That risk pool is constantly changing, and is impacted by a ton of different things, including the overall economic climate.

This means that you are sharing in the cost of millions of other people, many of whom may have poor loss history and/or credit.

That’s what insurance is though — sharing in the cost.

The next time your auto insurance rates go up, take a look at the big picture. Make sure you’re looking at ALL of the coverages, and corresponding rates.

Hope this helps!  If you would like to know more about Car Insurance be sure to visit our page dedicated to it.

Will my credit rating change my insurance rates?

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Will my credit rating change my insurance rates?

I was recently asked this question by one of our clients, and thought I would share the answer here for our readers.

There are a lot of things that go into homeowners and auto insurance rates, one of them being credit. I’ve heard a lot of complaints from people who don’t like the fact that insurance companies use credit in their underwriting.

Some people have absolutely no idea that it’s used in the rate at all.

At the end of the day, there’s not much we can do about it though. Insurance companies have been using credit in their rates for decades, and that’s not likely to change.

By the way, insurance companies don’t pull your credit like a mortgage company or credit card company does. There is no negative impact on your credit as a result of an insurance company looking at it.

When I say “pull” what I mean is that the insurance company is doing what’s called a soft inquiry, which is not the same thing as having your credit pulled (hard inquiry).

When does credit play a role in insurance rates?
It’s important to understand that insurance companies don’t continuously check or monitor your credit. Usually, they only check it when you first get a quote and/or sign up with them in the very beginning.

This means that if your credit score increases (or decreases) your insurance company does not automatically know about it.

So, to my customers question of whether or not his increased credit score will lower his rates, the answer is not automatically.

What has to be done on our side as the agent is contact the carrier the insurance and ask them to do what’s commonly referred to as a “re-score”. This is when the insurance company can re-run the person’s credit (soft inquiry) to see if there is any positive bearing on the rate.

This isn’t something that the insurance company is going to let the agency do every single year, so it’s not worth even asking unless there has been a significant change in your credit score, and only you as the customer would know if that was the case.

If you’d like to get a better handle on your credit rating, it could be helpful to setup credit monitoring. We hope this was helpful! As always, leave us comment below if you have any questions.  If you’d like to start your home and auto quotes now, click here to begin.

Will my credit rating affect my insurance rates?

Your credit rating is one of many factors that determine your insurance rates – with most insurance companies. There are some companies that do not.

Do insurance quotes affect my credit score?

While insurance companies do check your credit score to help determine your rates, they only do a ‘soft pull,’ which is a type of inquiry that will not affect your credit score.

Does paying your insurance help build your credit score?

Paying your insurance premium does not help build your credit history. Since insurance companies bill you in advance of providing any coverage, they do not report any positive – or negative – information to the credit bureaus.

What is an insurance score?

An insurance score is computed by insurance companies, and it is based on an individual’s credit rating. It will affect the premium they pay for insurance coverage.

What is a good insurance score?

Each insurance company calculates their insurance scores differently. Some rate them alphabetically, and others list them as similar to a credit score. If it’s a number system, a higher insurance score is typically better.

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