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October 27, 2012
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Will ballot question 5A affect insurance rates?

EAGLE COUNTY - Some supporters of the proposed property tax increase by the Eagle River Fire Protection District - issue 5A on the November ballot - have claimed the issue can be boiled down to simple math: Pay a bit more in taxes, or more than that in property insurance.

In discussing the proposal recently, Darell Wegert, a district board member, said he's been told by his insurance agent that his insurance bill will go up more than his tax liability if the proposal fails and the district is forced to close two of its four stations in 2014.

Other insurance agents in the valley said that claim is true.

Officials have been clear this fall that lack of revenue in 2014 will force the closure of two of the district's four fire stations - in Cordillera, Edwards, Avon and Minturn. That will almost certainly increase response times to some neighborhoods, and will mean fewer firefighters on duty at any time.

Increased response times increases risk, and insurance companies hate risk. Evaluating the risk to property is the job of the Insurance Services Office, or ISO. That group rates communities on a scale of 1 to 10, with 10 being the worst. A higher rating usually means higher insurance bills from many companies, although some companies, including State Farm, use their own risk-calculation systems.

Kelly Hollis, an agent at the Montag Group, a Farmers Insurance agency in Eagle, said property insurance rates for county residents are headed up in the next year anyway, thanks to the state's recent wildfires and other newly perceived risks.

"We have an association policy now that their increase (for next year) was 33 percent," Hollis said. "If you take away fire stations, it's going to go up more."

Hollis said one homeowners associationpresident her agency works with mentioned the prospect of station closures in a message to that group's insurance carrier.

"He was just trying to ask questions, and they raised the rates," Hollis said.

Since fire generally causes the biggest losses covered by insurance companies, it makes sense that those companies would be nervous about the state of fire protection in a community.

James McGalliard, owner of Alpine Insurance in Avon, said most companies have their own "black boxes" they use to calculate risk beyond the ISO ratings.

"The ISO rating is an important part (of risk assessment), but not the only part," McGalliard said. "There's no cut and dried formula to know."

While at least one insurance company is reacting to the mere prospect of further cuts at the fire district, McGalliard said it's hard to tell just when policy rates might change for any particular property owner.

"It will affect rates," he said. "But the scope is unknown and so is the timing ... I don't know how quickly they'll figure it out."

And, while companies set the rates, it's the agents who see the raised eyebrows and hear the complaints.

"I don't want to be the one to tell (clients), but that's what happens," Hollis said.

Business Editor Scott N. Miller can be reached at 970-748-2930 or smiller@vaildaily.com.


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The VailDaily Updated Oct 27, 2012 10:14PM Published Oct 27, 2012 10:11PM Copyright 2012 The VailDaily. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.