OF INTEREST TO VOLUNTEER FIRE DEPARTMENTS
WILL PURCHASE OF APPARATUS REDUCE FIRE INSURANCE RATES?
Town Should Consult With Rating Bureau Before Appropriating Money for Improvements—Factors That Enter Into Rate Making
BY far the most commonly asked question in volunteer fire department circles is, “Will the purchase of this piece of fire apparatus reduce our insurance rates?” And akin to this is the phrase that so often appears in rural newspapers describing the arrival of a new pumper or a ladder truck—”the machine is artistically decorated in bright red paint and gold stripes; a rating expert is expected soon to see just how much the insurance rates should be reduced.”
Any one familiar with the problems of establishing rates, or who attempts to reason out the economics of the situation, must be amused at such statements. Fire insurance rates are not only dependent on the purchase of fire apparatus but hinge on factors far more important.
Before a town considers the purchase of apparatus with the thought in mind of reducing the fire insurance rates, the matter should be brought before the attention of the insurance rating bureau having jurisdiction over the territory. Ask them if the purchase say of a 500-gallon pumper would reduce the rates of the town, and don’t wait until after the machine is bought, before an attempt is made to obtain this information.
What goes to make up insurance rates? There is the question of water supply, the amount of water available for fire-fighting purposes, the spacing of fire hydrants and reliability of supply. For the fire department, they consider the efficiency of the department, the amount of apparatus available and the condition of the apparatus, the manner in which the alarms are received, whether the apparatus is motor driven or if horses are used, and the condition of the hose. Then there is the matter of topography and climatic conditions—are there many hills, are the streets in good condition, does a railroad divide the town so as to interfere with the apparatus response, are there many snow and wind storms, does the city have long dry periods? Are the building laws adequate and is the building construction of such type as to form a barrier to the spread of fire? Are the electric installations made properly?
One can see from some of the topics outlined, that the matter of rates is far more than the purchase of fire apparatus. There are many more items that are considered, but some of the main ones are mentioned.
Perhaps the water supply is in such a condition that no matter how much apparatus was purchased for the fire department, the points of deficiency in the grading schedule would not be reduced. The economic thing to do in such a case would be for the town to concentrate on improving the water department. The matter of climatic and topographic features is a fixed charge because outside of possibly paving the streets, very often nothing can be done to reduce these deficiency charges.
Again perhaps the fire department was in a very good classification. Unless a consultation was had with the rating bureau, the town, in ignorance, would keep on purchasing fire apparatus in the hope of getting into a preferred insurance classification.
The firemen must be cognizant of the fact that conditions change rapidly while politics is often a slow moving vehicle. Let us assume the case where the matter was discussed with the fire insurance rating bureau and that the town was advised that if a 600-gallon pumper was purchased that the rates would be reduced. The town takes up the matter of the purchase of new apparatus hut it is necessary to wait until the November election in order to get the approval of the taxpayers. Other technicalities are introduced and the matter drags until possibly two years later before the pumper is actually purchased. Meanwhile a small factory has been constructed or possibly a large home development is well under way. When the pumper does arrive, the rates are not reduced because, as the bureau pointed out, the conditions are not the same, and too long a time has elapsed before the improvement was made. Is it fair to expect that the rates would be reduced under conditions that did not exist when the matter of fire department improvements were brought up before the insurance officials? Conditions such as the one described must be considered.
Next time when you purchase an extension ladder or make some improvement in the fire department, do not he at all disappointed it the fire insurance rates do not take a startling drop. Next time that your town plans to appropriate several thousand dollars for improving the fire defenses, consider the matter from a business standpoint and analyze the problem from the various angles presented in this article. Do not purchase apparatus just because the town next to you has a new chemical truck and you want to win the prize for the best looking apparatus when the county fire association has its annual parade and tournament.
Look at the problem in its proper perspective and you will not judge conditions too critically.