September 26th, 2014
Your home insurance rate can be affected by numerous things, such as your home's size, its number of residents and even the type of job you have. There are other factors that go into determining how much you pay for insurance based on what is called an ISO rating.
An ISO rating is calculated by the Insurance Services Office in each city or state. Depending on the score your house receives, your insurance rate will be adjusted accordingly. Many consumers are not aware of how much an ISO rating can affect their monthly premiums.
ISO takes into consideration two different sets of components to determine your score: an environmental module and a building module.
What environmental factors determine an ISO rating?
Half of your environmental rating is based on the location of your home in comparison to the quality of your local fire department, according to Verisk Insurance Solutions.
Because homeowners insurance covers damage from fires, your insurance rate is heavily dependent on how likely your home is to burn down. The likelihood of this happening is calculated by examining the closest fire department in your area and how immediately you would be able to get firefighters to your home in the case of emergency. In fact, receiving firefighter training yourself can actually reduce your home insurance costs, according to WFMY 2 News in North Carolina.
Other environmental factors that are looked at are the number of fire hydrants, access to a body of water and the condition of equipment that firefighters use, according to Insurance Quotes. The number of emergency responders in a city as well as the effectiveness of 911 calls are also considered.
Census data, including population and population density, are also part of an ISO rating. Other weather conditions are factored in, especially in areas that are susceptible to natural disasters.
What building factors determine an ISO rating?
The overall structure of your home plays a large role in your rating. Although some environmental factors are out of your hand, the condition of your home is not. The Insurance Services Office in your city will look at the age and the construction of your home.
If your home is already 100 years old, then it is much more susceptible to fires, leaks and overall dilapidation. This makes your home more of a risk to insurers, and therefore your insurance rate will likely be higher.
Your roof, square footage and additional features like a furnished basement or pool are taken into consideration as well. The ISO is able to quantify the estimated cost to replace or rebuild your home. If it will be costly to make repairs to your home because of its construction style, then your insurance rate will reflect this.
By understanding the level of risk associated with your home, you can more fully realize what's affecting your homeowners insurance. You can ask your insurer for an ISO rating.
CoverHound provides insurance data for homeowners, renters and drivers.