No buyers ever start their home search at a fire department, but perhaps they should. Why? Because having a highly rated fire department nearby can substantially reduce how much you’ll pay for home insurance, and every dollar you don’t put into your policy is a dollar you can devote to your home.
What’s fire got to do with it? Fire losses generate the most expensive home insurance claims, according to the Insurance Information Institute (III). The average claim from 2008 to 2012 exceeded $34,300, the III says.
That’s why fire considerations matter when you buy a house. Consider the following three factors that affect your premiums.
Not just any fire department
When it comes to fire departments and home insurance premiums, ratings matter. The Insurance Services Office, a New York-based advisory organization that provides statistical, claims and other information for the insurance industry, studies fire departments and assigns Public Protection Classifications (PPC) to cities, towns and communities. The PPC gauges the ability of departments to respond to structure fires — communities are ranked from 1 to 10, with 1 representing the best protection.
A department’s equipment, training and response times are considered in determining the PPC score. Home insurance providers care because a good PPC score indicates a lower threat of making a costly fire claim payout. That’s why providers often extend preferred, or lower, rates to residents of areas with good PPC scores. How much lower is tough to quantify because other factors such as natural disaster risk and claims history go into setting premiums.
You can find out your community’s PPC rating by talking to your insurance agent, the city or county manager’s office or by calling ISO Customer Service at 1-800-444-4554.
Stand by me – proximity matters, too
It isn’t enough to have a good fire department in your community. Home insurance providers want that department to be near your home. How close? Premiums can begin to rise by as much as 20 percent if your home isn’t within 5 miles of a fire department. Depending on the distance, the cost of insurance could even double.
Even closer to home
Just as important as the proximity of a home to a fire department is the proximity of a home to a fire hydrant. If no hydrant is within 500 feet of a house, fighting fires becomes much harder. Again, it could make as much as a 20 percent difference in your premiums if the home is farther from a hydrant than that, with the increases escalating with any added distance. Keep that in mind as you comb neighborhoods looking for the perfect house.
Bonus: How you can help
Regardless of your home’s proximity to a hydrant or a fire department, you can take measures to lower your fire risk. Those measures could reduce the amount you pay for home insurance.
If the home has smoke detectors, you could be eligible for home insurance premium discounts of up to 5 percent. Take it step further and install a sprinkler system and you could get a price break of up to 10 percent.
Finally, smoking-related fires cause an average of about $303 million in property damage each year, according to the U.S. Fire Administration. That’s why some insurance providers offer discounts of as much as 20 percent for nonsmoking households.
OK, so you might not actually start your home search at a fire department. But understanding the importance of city and community fire departments and other anti-fire features gives you another factor to weigh as you choose the perfect home — and try to keep it all from going up in smoke.