For Immediate Release: February 29, 2012
Changes in Property Owners' Fire Insurance Ratings Not a Result of DOI Actions
RALEIGH -- Some property owners have seen an increase in their insurance premiums recently as a result of their location in respect to the fire department that provides fire protection for their property. The increases are not a result of changes in policy or maps by the Department of Insurance. The changes are a result of corrections made by insurance companies, based on new technology that allows them to pinpoint an insured property's exact distance from the fire department.
A fire department's rating, as determined by the Department of Insurance, and a property's distance from the fire department both affect a property owner's insurance premium.
Across the country, property owners with homes less than five miles from their responding fire department pay homeowner's insurance premiums based on the fire department's rating. Properties located more than five miles from their responding fire department are not considered to be in a rated fire district, and therefore, are subject to significantly higher homeowner's insurance premiums. In late 1999, the North Carolina Department of Insurance pushed for and received permission to allow North Carolina property owners between five and six miles from their responding fire department to be benefit from a slightly less desirable "rural" insurance rating, resulting in lower homeowner's insurance premiums than they would otherwise have been charged in a non-rated fire district. At this time, 62 North Carolina counties have taken action to establish these rural (extended) fire districts.
Recently, insurance companies have begun using GPS technology, or computer software based on GPS technology, to accurately determine if an insured property is within a fire department's rated district, its rural district or outside its district. As a result of this new technology, some policies that insurance companies once wrote as being in the rated area are now being written as outside a rated district.
The Department of Insurance has rated fire departments in North Carolina since the late 1990s, and as a result, more than 725 of the 1,213 fire departments in the state have seen improved insurance ratings. Although the Department of Insurance rates departments, determining road miles and how the rate is applied are decisions made by the insurance company. If you have specific questions about changes in your insurance premiums, contact your agent, your insurance company, or the Department of Insurance toll free at 800-546-5664 or 919-807-6750.