Effect of Distribution System Design Upon Fire Insurance Rates

Abstract

Before commenting upon the distribution design and its effect upon fire insurance rates, it might be well to dwell for a few moments upon the question of how our fire insurance rates are made up, for no doubt there exists in the minds of many people, not directly connected with the insurance world, a somewhat hazy conception as to what constitutes these rates. Rates promulgated by a bureau usually cover the following features: structures and their contents; rents and rental values; explosion, riot, and civil commotion; use and occupancy; earthquakes; tornado, cyclones and windstorm, growing crops, etc. Each and every one is usually arrived at in a different manner, yet it may possibly be that the formation of a rate is dependent upon another rate, for example, the building fire rate directly affects the contents rate for that building. Consequently, on account of different methods used for arriving at rates pertaining to the features mentioned above, I shall purposely omit all features of insurance, other than methods of fire rate making on buildings. This will simplify the discussion and provide the best example as to methods used. Buildings regardless of location may be divided into the following general groups: Class A. Independent steel supporting structure, fire proofed. Class B. Structure of fire resistant materials, usual form being a reinforced concrete building. Class С Outer walls of fire resistant materials, usually brick or reinforced concrete, with wood interior construction. Class D. Frame.