CAFD rates improve, insurance rates to follow

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Home and business owners in Cloquet, Scanlon and Perch Lake will pay less for fire coverage on their property insurance this year thanks to the Cloquet Area Fire District (CAFD). That’s because every community within the CAFD coverage area dropped at least one Public Protection Classification, meaning fire protection is better than it was before.

Unfortunately, that credit probably won’t result in a cheaper insurance bill because – according to Reliable Insurance President Steve Micke – the state of Minnesota was ranked second worst in the nation last year for storm damage.

“There were 275 severe storms in the state last year, so the insurance industry took a beating,” Micke said. “So while people will see a credit for the better fire protection ratings, there’s a rate increase coming for everyone, pretty much all the insurance companies.”

The Insurance Service’s Office (ISO) Public Classification Program ranks community fire protection from Class 10 (little to no protection) to Class 1 (the best).

According to the new ISO’s ratings, the areas of Cloquet and Scanlon with fire hydrants are now ranked Class 4 by the ISO, a change from a Class 5 for Cloquet and Class 6 for Scanlon. In areas of Cloquet without fire hydrants and Perch Lake Township, the new rating is Class 6, except in areas of Perch Lake that are more than five miles from any fire station, which are rated Class 10. Previously Perch Lake Township was ranked Class 7 (within 5 miles of the fire station).

“With the current class 4 ranking, that puts us in the top 7 percent of fire departments in Minnesota,” said CAFD Chief Kevin Schroeder.

Schroeder credited the “synergy created by combining the three fire departments – Cloquet, Perch Lake and Scanlon – for the improved fire protection rating.

In Minnesota, there were no communities ranked class 1 or class 2 in 2011, while only 39 ranked class 3, and 103 were ranked class 4.

“In my experience, a Class 6 for a non-hydrated area is rare and everyone should take some pride in that classification since the vast majority of hauled water areas result in Class 7 or 8,” said ISO’s Doug Sele, in a letter to Schroeder.

Schroeder said the survey was done in June but the CAFD got the results last month.

“We didn’t think it was possible for every community to drop in classification,” Schroeder said, “so we did well.”

Schroeder is proud of the fire district and its staff, and he’s also happy that property owners will benefit.

“In addition to recognizing that the [fire] district concept is working, the lower ratings will actually have tangible, monetary results for the district population we serve,” Schroeder said.

Unfortunately, because of the predicted insurance rate increases, property owners will have to look for the decrease in the small print, rather than on the bottom line of their insurance policy.

The new classifications won’t go into effect until after April 1 or whenever an insurance policy is due for renewal, whichever comes later, Micke explained. The insured needs to do nothing to take advantage of the potential savings of this rating change as their agents and insurance company will automatically apply the new ratings upon policy renewal.

Tags: carlton county, cloquet