Understanding Rule 85: The Rating Process

This is Part III of our seven-part series on Understanding Rule 85. In this series, we delve into the intricacies of Rule 85 and its implications for property insurance.

In the first two parts of our series, we introduced class ratings and explored the different construction types.

Now, we'll dive into the rating process itself, outlining the essential requirements and explaining how key factors play a role in determining a building's final rating.

Detailed requirements for the rating process

Accurately rating a property requires a comprehensive understanding of several critical factors. Below is a detailed list of what’s needed to ensure a precise rating:

Construction type

The construction type of the building – covered in Part II of this series - is fundamental. Knowing whether the structures classification aids the assessment process, highlighting specific vulnerabilities.

Protection class (PC)

Protection class is the measure of the community’s fire protection capabilities, evaluating four distinct factors:

• Fire department, including distribution of stations, staffing levels, equipment, and personnel training.
• Water supply, including water flow capacity, fire hydrant location, and maintenance.
• Emergency communications system, including dispatching system, staffing, and training.
• Fire safety control, including fire code and building code enforcement, fire investigations, and public fire education programs.

Properties in areas with better fire protection capabilities receive more favorable ratings, leading to potentially lower insurance premiums.

Learn more about community ratings.

Distance to fire station

Buildings closer to a fire station are likely to receive faster response times in the event of a fire, which reduces the risk of extensive damage. This factor is closely tied to the protection class and can significantly influence the final rating.

CSP class code

The Commercial Statistical Plan (CSP) class code categorizes properties based on their usage and associated risks. This code helps insurers understand the type of occupancy and the inherent risks that come with it. For example, a warehouse and an office building would have different CSP Class Codes, reflecting their unique risk profiles.

Learn more about CSP codes. 

How each factor influences the final rating

• Construction type: Built tough? Pay less.
• Protection class: Lower risk means lower rates.
• Distance to fire station: Being close to a hose can reduce potential losses.
• CSP class code: Building usage indicates inherent risk – and the associated price tag.

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The rating process involves evaluating multiple factors, each contributing to the final assessment of a property’s risk profile; construction type, protection class, distance to fire station, and CSP class code enable ensure accurate premiums that reflect a given building's true risk level. This detailed understanding leads to higher precision and better protection for the property.

Stay tuned for Part IV of our series, where we’ll explore typical types of class rated buildings.