Fire insurance premiums to decrease

Commissioner of Insurance Jim Donelon says Acadia and St. Landry Parish homeowners in Eunice can expect significant rate reductions in their fire insurance premiums, effective July 6, 2009.

Donelon commended the community and local officials of Eunice for the improvement of their protection ratings from Class 4 to Class 3. These improvements will bring about insurance rate reductions for many policyholders.

“Your efforts to make your property safer have brought about the lowering of your fire protection rating, which results in lower insurance rates on your homes and other property,” Donelon said.

For example, fire insurance for a home valued at $150,000 has been costing Eunice residents in St. Landry Parish about $1,319 a year. That cost is likely to drop to about $1.201 under the new rating, saving homeowners about $117 in annual premiums. Fire insurance for a similar home has been costing Eunice residents in Acadia Parish about $1,238 a year. That cost is likely to drop to about $1,133 under the new rating saving homeowners about $105 in annual premiums.

“The amount of the premium rate reduction will vary, depending on the value of the property, the fire district where the property is located and the rate schedule of the company insuring the property,” said Donelon.

Fire insurance premium rates for fire protection districts are promulgated by the Property Insurance Association of Louisiana (PIAL) and approved by the Louisiana Insurance Rating commission of the Department of Insurance. Fire districts are rated on a scale of 1 to 10 by PIAL, with 1 being the best.

Rankings may change any time PIAL resurveys a district, or they may remain the same. An upgrade (such as Class 6 to Class 4) will probably mean a drop in insurance rates.

PIAL conducts surveys of fire district’s fire protection services before issuing a rating. Factors that affect an area’s rating include the number and type of training of firefighters, the number of fire stations and fire trucks, and the availability of water. If PIAL surveys a district and finds it is offering fewer services than before, they may “retrograde” the class, from a 4 to a 6, for example. When that happens, fire insurance rates go up.

Policyholders in the affected areas should contact their insurance producer/agent if the expected reduction in fire insurance premiums is not reflected in their next renewal notice.

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