An ISO Class 1 fire department is one that provides excellent fire protection based upon an evaluation by the Insurance Services Office, a New Jersey-based for-profit company that provides these ratings. ISO sells the information it collects to insurance companies, which may use these ratings to determine property insurance rates.
The ISO classification ratings are based upon several criteria including a community's emergency communications systems, fire department, water supply, fire prevention efforts and public fire safety education programs. Communities receive a rating on a scale of one to 10. A rating of 10 indicates that the community fails to meet minimum requirements, such as having a formal fire department that serves a specific area. A fire department that achieves a Class 1 rating may display the rating on patches and equipment.
In the past, ISO ratings were used by all insurance companies when determining property insurance rates, but as of 2015 some insurance companies, like State Farm, no longer purchase this data from the Insurance Services Office. Instead they rely on other information, such as the number of losses within a ZIP code or a homeowner's credit score, to set insurance rates. However, some states require insurance companies to use ISO data when determining insurance premiums.