If you build it, will they come?
Limited fire service in rural areas makes it tough to insure greenhouses and other commercial buildings
By Doug Banfelder
You’ve found the perfect property for your grow operation — a great micro-climate, enough room for future expansion and a good price. Do the deal, build out your facility and start growing, right?
Not so fast. Do you know what the site’s PPC code is? It is important to find out before you buy, and here’s why: PPC stands for Public Protection Classification, and these codes are used by the vast majority of insurance underwriters not only to set rates, but even to decide whether or not their carrier will insure your buildings and equipment against fire or theft.
The PPC codes are determined by the Insurance Services Office (ISO), which is the insurance industry’s primary rating bureau. ISO rates the availability and sufficiency of local emergency services in nearly every state in the nation. However, your state may have its own rating bureau — for example, Washington has the Washington Survey and Rating Board (WSRB). Idaho and Mississippi also have their own rating agencies.
Whether it’s determined by ISO or a state agency, the PPC rating is key.
What Ratings Mean
PPC ratings use a scale of 1-10, with lower numbers indicating higher levels of service. Metropolitan areas are generally rated PPC 1-3 due to their professional, full-time fire departments with a wide array of equipment and extensive firefighter training.
By contrast, many rural and agricultural areas are rated PPC 9 or 10, meaning the nearest fire services are at least five miles away by road, without a nearby or on-site water source of sufficient size and pressure.
This makes knowing your intended site’s PPC a must-ask line of questioning for your realtor, insurance agent and local fire department. And, as suggested above, the PPC can also be a strong indicator of local law enforcement response times, which is vitally important in the event of an emergency.
While there may be some emergency services nearby, small-town fire departments often lack the equipment and training needed to combat large structural fires possible at commercial grows. (See sidebar for a letter from a rural department’s fire chief discussing these limitations — and his suggested solution.)
Farm or ranch properties with homes may receive a “split code,” with a lower code for the residence and a higher code for the commercial structures on site.
The reason for this is simple: Home fires aren’t generally of the same size or scope as those occurring in commercial operations, and thus require less equipment and pose a smaller degree of risk to firefighters. While a property’s residential building may be eligible for fire insurance, a commercial structure on the same premises may not. (In any event, the various structures will likely be insured by different carriers.)
PPC ratings are a big issue for those near protected forests too, because local fire departments in such areas generally emphasize wildfire preparedness, a priority driven by the increasing number of homes being built along what are known as Wildland-Urban Interfaces.
The bottom line is that a lack of fire protection and subsequent PPC 9 or 10 rating is problematic for anyone wishing to obtain full property coverage in a rural location.
In some locations, an automatic aid agreement may be possible. These agreements provide subscription-based services in which a fire department will protect properties outside its boundaries for those who pay an annual fee. ISO may then review and change its rating of a given location after evaluating such an agreement.
For those businesses in a PPC 10 location, there is another possible answer. ISO recently developed a new code, PPC 10W, which recognizes the reduced fire risk that comes with having a large, accessible water supply on one’s property.
It is important to note that such a rating is property-specific and requires that the site be between five and seven road miles from a fire department. It also requires “creditable water supplies” to be located within 1,000 feet of the structures. Many rural cannabis cultivation properties may meet these criteria.
To find out if your property qualifies for the new 10W PPC rating, you will need an ISO (or state fire rating bureau) inspection to review the location and size of your water supply, as well as the equipment available to get that water to the fire.
The availability of timely police responses is another practical consideration, but not one rated by ISO. However, the PPC is used by underwriters to determine if a given property qualifies for theft protection.
Whether you already own or are looking to purchase a grow site in a rural area, you need to know and understand the property’s PPC. Your realtor, local fire department or insurance agent will either know or be able to find out for you.
If your dream property has been rated by ISO or a state bureau as a PPC 9 or 10, or if your carrier has revised its underwriting rules and is balking at providing the property coverage it has in the past, ask your insurance agent to approach his or her underwriters to see if they are able to secure fire coverage under any of the scenarios discussed here.
Doug Banfelder founded Premier Dispensary Insurance (www.premierdispensaryinsurance.com) in 2010 to support those participating in Arizona’s Medical Marijuana Act. Today the agency is a leading industry provider, serving clients nationwide with policies for the full range of cannabis business operations.