What is a protection class and how does it affect my homeowners insurance rate in Ohio and Indiana?
You’ve probably found yourself scanning through your insurance documents from time to time, and you’ve come across this: A small line on the declarations page of your homeowners policy that says ‘Protection Class’ with a number next to it. Well, what does it mean?
The class, developed by ISO (Insurance Services Office) ranges between 1 and 10 and is based on how quickly the nearest fire department can respond in the event of a fire, and what equipment they have. Here are some of the things they’ve historically looked at:
What kind of trucks do they have?
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.
Scores 1-8 generally indicate that a fire department can respond fairly quickly, and thus, your insurance rates are likely lower since the likelihood of your house burning to the ground is lower. 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. Therefore, insurance rates may be higher as a result.
Homes within city limits tend to have the best rates, while homes 5 miles or more from the nearest fire department and over 1000 feet from a fire hydrant tend to be much higher.
Is this really the best way to be scoring things anymore? Hasn’t technology improved to a point where we can get faster response?
Well, 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 PC 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 I work 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 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 though, since this company decided to switch to this method, it’s been very 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 a 9, but are now a ‘Partially Protected.’
Not every insurance company has made the decision to consider other factors into their rating systems yet regarding 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.
If you own a gas station or convenience store – and especially if you own several – how are you supposed to find the best gas station insurance plan? Where do you start? What do you look for? How do you cut costs? And when will you have any time at all to research this?
This is going to be more of a starter’s guide to finding the right plan. Every store is a little different, so each one will have different needs than the next. Some sell alcohol, some share space with franchised fast food restaurants, some have a bigger commercial base, and don’t forget the car wash. Keeping that in mind, I’ve tried to contain this to the basics.
We’ll start with a few things you’ll want to look for in a policy, agency and company, then we’ll move into some ways to save money.
Gas Station Insurance Necessities
Gas tank and awning coverage – It’s common knowledge that you’ll want to cover any buildings and the contents inside, but the canopies, smoke stacks, underground piping and connections, and gas tanks are not covered as an extension of the building. You’ll want to make sure that each of these things are covered. Some companies are much more comprehensive in their coverage of these things than others, so you’ll want to talk to your agent about this. In fact, some offer a blanket extension to list all of these things under one coverage. You’ll want to make sure you know how much it’s all worth, then find a company willing to insure it correctly.
Pollution Liability – If there’s a gas spill tomorrow, what are you going to do? You’re going to have enough to worry about on the PR side without having to wonder who is going to remove the pollutants. Make sure this is included.
Food Spoilage Liability – You do all you can to find reliable vendors and suppliers for your food, drinks and snacks, but if a sandwich is left on the shelf a bit too long and an unknowing customer buys it, there could be a problem. Do what you can to prevent that from happening, but be sure that when it does that you’re covered.
Liquor Liability – If you sell alcohol, you already know how important this is. You’re already doing all you can to prevent possible claims, but make sure you’re protected when and if something should happen.
Crime and Vandalism – For many, unfortunately this is a huge risk. Installing alarms, cameras, and implementing safety procedures is an excellent first step, but you’ll want to be ready in the event of burglary, robbery, vandalism, and employee theft.
Now let’s look at a few ways to save some money on your business insurance policy.
Ways to Save Money on Gas Station Insurance
Loss Control – Most insurance companies look back a total of 3 years for your losses. No losses are obviously the best if you want the best price, but quite a bit of credit can be given if you’ve taken steps to avert further losses. If you were robbed, but then put in a security system, that would be reason for the company to meet you in the middle.
Pay in Full – Many companies give significant discounts if you can pay your insurance on an annual basis. It’s always worth asking for more credit when you’re able to, so plan ahead so you can take advantage of this.
Multi-policy discounts – Most people know this is true for homes and autos, but did you know it works for commercial accounts as well? Always ask!
Experience – Credit can also be given if you’ve simply put in the time and paid your dues. You may not only qualify for better discounts, but better programs entirely if you have 3 or more years of experience as a business owner
Insuring Everything with One Company – Just like buying in bulk, there are many carriers that will give more and more discounts if you place everything with them, much like the multi-policy discounts as mentioned above. If you own several stores, make sure to look into placing them with one carrier. If you operate in multiple states, it’s worth looking into whether or not your carrier can work for every location that you own.
Again, this is meant to simply be an introduction to some quick ways to find the policy right for you. Be sure to check with your agent for additional coverage and discounts that apply specifically to your business. Of course, you can always contact us here for a quote as well and we can discuss what sort of plan would fit your business best.
“If my house is completely destroyed, can I cash out and move instead of using the insurance money to rebuild in the same spot?”
Scenario: Three days ago, your house burnt to the ground. As reality sets in and the shock wears off,you start thinking of how exactly the cleanup and rebuild is going to happen.. and then you have some additional thoughts:
“Hmm… Neighbor Jim is kind of a jerk and I still haven’t forgiven him for spinning his tires on my lawn. The kids across the street are complete animals, and frankly the 40 minute drive to work is starting to wear thin. Do I really need to rebuild here? Can’t we just take the money and move somewhere more convenient?
The short answer is that yes, you can! How much you get from the insurance company – well, that depends on what type of policy you have. Let’s walk through the process of finding out what sort of coverage you have on your policy, and how much you’d actually get under these circumstances:
Locate your homeowners policy and find out if you have your home listed at Replacement Cost (RC) or Actual Cash Value (ACV).
RC: If the house is totally destroyed, this is the amount it will take to completely rebuild it. If it takes $350,000 to rebuild your house today, you’ll want to see it insured for $350,000 and make sure it’s accurate. Too little coverage and you may not have enough to rebuild. FAR too little and you may even face an additional penalty on top of that! Too much coverage and you will have found yourself overpaying for your insurance. If your $350,000 house is insured for $900,000… sorry, you’re only getting $350,000. So talk to your agent today and make sure this is an accurate amount!
ACV: This is the RC amount minus depreciation. For instance, if your $350,000 home is listed at ACV, in the event of a loss the company will take into account the age and condition of things in determining the payout as result of a claim. If your home is already listed at ACV, then you may as well stop here. The coverage is what it is, and you’ll receive the depreciated amount on the home whether you cash out or rebuild.
Ok, so let’s say you’ve found that your home is insured at RC. Now you’re going to want to determine whether you have a standard policy or one with a Cash-Out Option. This is NOT the same as Guaranteed Replacement Cost, Increased Cost Endorsement, etc. The Cash-Out Option is exactly that, and should be worded very plainly. This is the determining factor as to whether or not you can cash out at full value.
If you are unable to determine whether or not you have this coverage, it’s time to call your agent and find out. They should be able to tell you whether or not you have it, and if it’s even available to you at all as not every company is offering it.
If you have the Cash-Out Option, congratulations – kind of. If you face a total loss, you will receive the replacement cost amount on your home, regardless of whether you decide to rebuild there or not. If you do not have it, you will only receive the replacement cost amount if you decide to rebuild in the same spot. If you decide to cash out and move, you will receive the depreciated ACV amount.
There are certainly companies out there that offer the Cash-Out Option. It may cost a little more than your standard policy, but could be well worth the difference if this is something important to you.
If this is something that sounds interesting to you, be sure to check with your agent and see if it’s a coverage that can be provided. Otherwise you can always contact us here for a quote and we can discuss what this sort of plan would look like for you.
Why do my auto insurance rates keep going up even though my car is getting older? At Stoller Dunham 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.
Loss of Income
Loss of use
These are all things that you are covered for on your auto policy. How many of them have to do with your car?
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.
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.