How Does My Local Fire Department Impact My Home Insurance Premium?
- Nov 30, 2016
With plenty of experience shopping around for home insurance, new buyers know a fair amount about the factors that affect premiums. Distance to a fire hydrant and fire services is an obvious one. However, did you know the closer you live to a fire department can lower your premium? This is because of the high probability your home will be saved from a fire. There is another question homeowners must consider: what if you live near a fire station that does not meet the national standards set for fire prevention and suppression? Furthermore, what if you live in a community that has not invested substantially in fire safety? The quality of services matter and they have a large impact on a homeowner’s insurance policy.
The National Standard for Fire Services
Fire departments across the country are reviewed for quality by the Fire Underwriters Survey (FUS), a national organization that provides the insurance industry with information that helps insurers determine a suitable premium for residential and commercial assets. About 85 per cent of property and casualty insurance companies in Canada use the data procured by the FUS for underwriting purposes and statistical reports.
In a sense, your homeowner’s policy will be determined by your community and how much it has invested in the local fire department. The FUS uses a grading system called the Classification Standard for Public Fire Protection (CSPFP), which assesses the level of fire risk in a community. The scores are based on a number of things that are controlled by the municipal government, such as the effectiveness of emergency communications, the fire station itself, abundance of water supply and the preventative measures taken by the community to reduce the risk of fire. Typically, in an urban setting, this is not a concern, however rural properties/communities that are situated far from water supplies can be subjected to lower scores.
Using the data procured by the CSPFP, the FUS grades communities in two ways. The first concerns commercial assets. The second, the Dwelling Protection Grade (DPG), concerns homeowners. This system ranks communities on a scale of one (excellent fire services) to five (inadequate or no fire services) to measure their ability to suppress fires in small structures like single-family homes. Insurance companies use this rating system in conjunction with a home’s distance to fire services to calculate premiums.
The score is a reflection of the following:
- How adequately that fire station responds to fire alarms
- The number and distribution of fire services in the region
- The type of training provided to firefighters
- Regular maintenance of the fire department’s equipment
- Regular maintenance and testing of water pumps
- The extent of the community’s water supply
- The number and regular inspection of fire hydrants
- Activities the community promotes for fire prevention and investigation, and fire safety education
The above criteria are nationally accepted standards that were developed by organizations like the National Fire Protection Association and the American Water Works Association. When these institutions upgrade or change a criterion, that change is reflected in the CSPFP.
The advantages of having this system is two-fold. First, communities that excel at fire suppression are rewarded when the data are passed along to insurers who in turn will lower homeowner’s insurance premiums. The rating system is an excellent indicator of inadequacies in fire safety. Armed with this information, communities with low scores can invest in prevention, safety education and training for personnel. The average homeowner can help reduce their premium with fire alarm systems, smoke detectors and carbon monoxide detectors.
With national-level associations backing up fire safety protocols across communities in Canada, people may assume that every community is employing high standards when combating fire. Unfortunately, that is not the case. The quality of fire services will vary across different jurisdictions and although all community members may potentially pay the price, homeowners have the added burden of high premiums.