Insurance rates at Union businesses and homes should come down now that the city’s ISO has decreased.

City Administrator Russell Rost said the ISO rating was reduced from a 5 to a 4, in part due to city water system upgrades.

ISO surveys all components of the water supply system, including pumps, storage, and filtration. Fire-flow tests are made at representative locations in the community to determine the rate of flow the water mains provide.

ISO ratings are evaluated every 10 or 12 years. The ISO is a combination of factors that determine how quickly a fire can be suppressed in a particular area.

Rost explained that when the ISO survey was last conducted, some inaccurate water flow data was collected by the surveyor.

The city then submitted data from its water study, conducted in 2012, and the ISO was reduced.

Rost noted that the city received copies of the letters which were addressed to the Union Fire Protection District. The fire district increased its ISO rating score, but the rating outside of the city limits remains a 5.

“I am sure the water study was significant because it shows what we can actually provide for fire suppression,” Rost said.

He added that the city has plans for an additional well, and there has been “looping” to the water system that makes the water supply more stable in the event of an outage.

“I’m sure it has all been very useful in getting us a better rating,” Rost said.

ISO’s public protection classification program plays an important role in the underwriting process of insurance companies.

The lower classification of 4 should result in lower insurance premiums for residential or commercial properties.

According to Union Alderman David Pope, who owns an insurance agency, the lower rating could save homeowners between 8-12 percent on their homeowners insurance each year.

“Most companies looking for the ISO to be a 4 or better, that sweet spot for rating,” said Pope. “The higher it goes, you are not getting as good of a rating.”

It varies from company to company if the rating changes when the homeowner policy is up for renewal, or if the rating can be added at any time.

He explained that some homeowners may not actually see much of a change in their rate because rates may be going up. The lower ISO rating may keep premiums about the same amount as the current premiums.

“The overall market is going up on homeowners insurance, but the change in ISO rating is going to mute that increase,” he said.

The ISO change also will impact insurance on commercial property.