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When it comes to obtaining insurance for the real estate industry, the biggest risk you face is the property itself. As underwriters assess new risks, they take their time to ensure that they are partnering with a company that values proper maintenance, risk transference, and other important factors. Moreover, they evaluate the construction types of your buildings, which directly impacts your premiums. Typically, the stronger the building material, the better the rate you’ll receive.
Underwriters use six different classes of construction to evaluate your property:
- Joisted Masonry
- Masonry Non-Combustible
- Modified Fire Resistive
- Fire Resistive
Insurance Services Office Inc. (ISO) uses a grading system to determine how a building will hold up in the event of a loss. For instance, a “frame” construction building will usually receive a higher rate than a “masonry” or “fire-resistive” building. This is because the probability of the structure being damaged in a fire is much greater. Here are the six construction categories explained:
ISO Class 1- Frame
- Buildings with exterior walls, floors and roofs of combustible material – typically wood. Masonry veneer (brick-face) or metal clad don’t change the construction class.
- Frame is easy to build and economical, but burns quickly and easily. It has concealed spaces where fire can continue.
- Least desirable class for underwriters.
- Examples: Habitational 3-4 stories max.
ISO Class 2- Joisted Masonry
- Buildings with exterior walls of masonry or fire-resistive construction rated for not less than one hour and with combustible floors and roofs. This typically includes block constructed buildings and can include heavy timber buildings.
- Harder to ignite, and burns at a slower rate. There are fewer concealed spaces than frame construction and a higher rebuild rate based on less damage.
- Examples: Habitational, small office or retail. 3-4 stories max.
ISO Class 3- Non-Combustible
- Buildings with exterior walls, floors and roofs of noncombustible or slow-burning materials.
- Easy to erect, economical to build and uses materials that don’t easily burn.
- Typically steel construction. Can easily lose strength under high temperatures, typically seen in fires.
- Examples: Warehouses and manufacturing facilities.
ISO Class 4- Masonry Non-Combustible
- Buildings with walls made of masonry, consisting of concrete block, reinforced masonry and can be combined with steel framing.
- Roof construction is typically made of heavy steel.
- No wood framing in the roof which helps keep the structure standing in a large loss. Walls are a minimum of 1 hour fire resistive.
- Examples: Shopping centers, office buildings, warehouses and schools.
ISO Class 5- Modified Fire Resistive
- Building construction consists of fire resistive materials such as masonry and protected steel materials not less than 4” thick.
- Fire resistive less than 2 hours, but greater than 1 hour.
- Roofing deck is heavy steel frame with concrete poured on steel deck or pre-poured concrete.
- Examples: High and mid-rise office buildings, apartments and condo buildings.
ISO Class 6- Fire Resistive
- Fire resistive for not less than 2 hours for walls, floors and roofs.
- Typical wall construction is masonry at a minimum of 4 inches thick, hollow masonry is a minimum of 8 inches thick.
- Floors and roofs are a minimum of 4 inches thick and fire resistant a minimum of 2 hours.
- Reinforced concrete of frame or steel are well protected and are also a minimum of 4 inches thick for walls, roof and floors.
- Examples: High-rise office buildings, condos and parking garages.
It’s vital to keep in mind how new or acquired properties will be rated and whether they fit within an insurance carrier’s underwriting guidelines. If you need more information, don’t hesitate to contact a Marsh McLennan Agency (MMA) advisor.