Mayor, City announce lower insurance rating which could mean lower insurance costs for Austin Homeowners - For immediate release - June 2, 1998 - Contact : Michele Middlebrook-Gonzalez, Public Information Office, (512) 499-2410 or (512) 613-0630 (digital pager) - Cathy Brandewie, Public Information Manager, Austin Fire Department, (512) 477-9982 or (512) 603-2148 (digital pager)Some Austin homeowners may soon enjoy lower property insurance rates, thanks to an improvement in the fire suppression rating recommended by the Insurance Services Office (ISO). Mayor Kirk Watson made the announcement today, Wednesday, May 27. Effective June 1, the City of Austin will be rated as a "2" instead of a "3" according to the ISO's Public Protection Classification (PPC) system. Depending on an individual homeowner's specific policy coverage and history, the improved PPC rating could reduce residential insurance premiums by approximately eight percent.
"We want to make sure that the citizens of Austin are aware of this change because it could mean spending less money on their insurance," said Mayor Kirk Watson. "I would urge everyone, especially those who were recently annexed, to check with their insurance company. I also want to recognize the Austin Fire Department and our Water/Wastewater Utility. It is because of the first-rate job that our firefighters do as well as our superior water delivery system that has led to the potential for savings for area homeowners."
On February 1, Texas became the last state in the country to replace the key rating system with the ISO's Fire Suppression Rating Schedule and related Public Protection Classification system. The ISO classifies communities from "1" (the top PPC rating) to "10" (the worst PPC rating) based on how they score on the ISO Fire Suppression Rating Schedule. The schedule grades features such as water supply and distribution, fire department apparatus and equipment, distribution of fire companies, staffing and training of fire personnel, fire alarm processing, and fire prevention efforts. The Texas Department of Insurance (TDI) oversees the ISO process and reviews the PPC recommendations.
TDI provided an example of what the lower rating may mean for a typical homeowner. A brick veneer home located in Austin (Travis County), insured for $132,000 (the median price of an Austin home), with contents insured for $52,800, $25,000 in personal liability coverage, $500 in medical payments, and a one percent deductible would have annual premiums of approximately $539 at the "3" rating using Austin's benchmark rate. The same coverage on the same home will cost only $495 - a savings of $44 - with the "2" rating at the benchmark rate. Residents in newly annexed areas that were previously served by fire departments with higher classifications than Austin may see an even greater difference in their insurance rates.
(NOTE: actual premiums will vary for individual policies. Rate regulated insurance companies may "flex" as much as 30 percent above or below the benchmark rate. In addition, approximately 85 percent of the market is not rate regulated.)
The new classification is based on an evaluation of Austin's fire protection and water supply systems conducted in early 1997. The ISO examiners gave especially high marks for the city's ability to process and handle emergency calls; the number and location of engine and truck companies; the water supply system available for fire suppression; and fire prevention efforts, including code compliance, public education, and investigations.
Only one city in Texas, Plano, achieved the top category (the move from a "2" to a "1" will go into effect in September). Irving is the only other Texas city that has earned the "2" rating (effective July 1).
Along with the adoption of the ISO system, the TDI is phasing out the "fringe rule," which means that each fire department service area is rated solely on its own fire suppression capabilities without taking into account the rating of neighboring larger cities with better fire protection. All of the unincorporated areas around Austin have been given a temporary rating of either a "6" or a "7" pending review by the ISO.
Examples of Insurance Rates at Each PPC Rating (Benchmark premiums for Homeowners Policy Form-B on a brick veneer home located in the City of Austin in Travis County with coverage of $132,000 for dwelling, $52,800 contents, $25,000 personal liability, $500 medical payments and a 1% ($1,320) deductible. Actual premiums will vary depending on insurance company and on the optional endorsements and deductibles purchased by homeowner. Information provided by the Texas Department of Insurance.) PPC Rating - Annual Insurance Premium : 1 $495 - 2 $495 - 3 $539 - 4 $550 - 5 $578 - 6 $605 - 7 $605 (premiums not allowed to increase by more than 10% 1st year; actual premium would be $633) - 8 $605 (capped; actual premium would be $660) - 9 $605 (capped; actual premium would be $677) - 10 $605 (capped; actual premium would be $685)
Austin City Connection - Source: City of Austin - Modified: Tue Jun 2 10:26:22 1998