What Does an ISO Rating Mean (for Car Insurance)?

Last Updated on September 14, 2023

The Insurance Services Office (ISO) is a research group funded by a group of insurance companies. This organization assigns ISO ratings, and these ISO ratings impact insurance premiums.

Virtually every car insurance company in the United States uses the ISO vehicle rating to calculate auto insurance premiums.

What does an ISO rating mean for car insurance? How does an ISO rating raise or lower car insurance premiums? Today, we’re explaining everything you need to know about how ISO ratings impact car insurance.

What Does an ISO Rating Mean (For Car Insurance)?

What Is an ISO Number?

The Insurance Services Office (ISO) is a research group funded by a group of insurance companies.

The ISO is best known for two metrics, including a Public Protection Classification (PPC) rating used to calculate home insurance premiums and an ISO rating that tracks the value of your vehicle and its repair costs.

ISO Ratings for Auto Insurance

The ISO assigns rating symbols to vehicles based on make and model. The ISO analyzes each vehicle based on its safety ratings, repair costs, real-life losses, and other metrics.

Based on this information, the ISO assigns each vehicle a Vehicle Series Rating (VSR). The purpose of the Vehicle Series Rating is to match premiums for each particular type of car to losses for that type of car.

Insurance companies can use this ISO rating to determine the risk of insuring a vehicle. A higher ISO rating means higher risk for the insurer, which means the owner of the vehicle will pay higher insurance premiums.

A big, boxy SUV with poor handling, for example, may have a very high ISO rating. When this vehicle is in an accident, it can cause significant damage to other people and property. It’s also costly to repair.

A smaller, cheaper, economy vehicle with a good safety rating, meanwhile, may have a lower ISO rating. It won’t do much damage in an accident, it’s cheap to repair, and it protects its passengers.

Which Factors Affect an ISO Rating for Car Insurance?

The Insurance Services Organization considers all of the following factors when determining your ISO rating symbol:

Make and Model: Each vehicle make and model has its own ISO rating.

Car Safety Ratings: Cars with a five-star safety rating tend to be cheaper to insure than cars with a four-star safety rating or lower.

Vehicle Value and Cost to Repair: Higher-end vehicles are generally more expensive to repair than lower-end vehicles. Additionally, certain vehicles just have high repair costs regardless of value. Higher repair costs lead to higher costs for your insurer, which raises premiums.

Likelihood of Theft: Some vehicles are more likely to be stolen than others. They might have weak anti-theft systems, for example, or be highly desirable vehicles to steal. ISO ratings take this factor into consideration.

Chance of Collision: Some vehicles are involved in more collisions than others. Certain high-end sports cars, for example, are more likely to get into a collision than basic economy vehicles.

The ISO considers all of these things before assigning a Vehicle Series Rating.

What Factors Do Not Impact an ISO Rating for Car Insurance?

Certain factors do not impact your vehicle’s ISO rating, including:

Your insurance company still takes all of these factors into consideration when calculating your premiums, although these factors are not reflected in your ISO rating.

Each Car Has Two ISO Rating Symbols

Your vehicle has two different types of ISO rating symbols attached to it:

Personal Auto Physical Damage Rating Symbol: These codes indicate the relative risk of loss for each private passenger vehicle for a given model year. Each symbol has a corresponding symbol relativity, or factor, that insurers will use to calculate premiums for comprehensive and collision coverage.

Liability and PIP/Medical Payments Symbol: These codes indicate the relative risk of loss for each make and model of vehicle. Again, each symbol has a corresponding symbol relativity, or factor, that insurers can use to calculate premiums for liability and PIP/medical payments coverage.

Both of these rating symbols are specific to your make and model of vehicle. These symbols will affect your car insurance premiums.

ISO Ratings for Home Insurance

The ISO is also known for its home insurance ratings. ISO ratings are crucial in the price you pay for home insurance premiums.

Based on its research, the ISO releases a Public Protection Classification (PPC) to each fire department.

This ISO rating is extended to any properties within the fire department’s service area. Therefore, the PPC is a measure of the fire protection services you receive from your local fire department. It’s an assessment of the quality of the fire protection services you receive, for example, including how quickly your fire department responds to an incident and how likely they are to put out a fire.

Your insurance company uses your property’s PPC – among other factors – to set your home insurance premiums.

A home in a neighborhood with a good PPC rating, for example, may pay lower premiums than a home in a neighborhood with a bad PPC rating, all other things being equal.

The ISO considers things like the dispatching and communication system at your fire department, its water supply system, and its firefighting capabilities before assigning a PPC. Some fire departments are faster and better equipped than others, reducing the chance of a catastrophic loss from a fire.

If you bundle your home and auto insurance together, then your insurance company will consider your home’s PPC number and your Vehicle Series Rating to calculate overall insurance premiums.

Final Word

Generally, higher-end vehicles are more expensive to insure than cheaper vehicles. However, this isn’t always the case: two vehicles with identical MSRPs could have significantly different ISO ratings, and these ratings could change the price you pay for car insurance.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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