The ISO 80% Radius Rating Rule

When agents put down the radius in the application process, they need to remember how ISO does it and also understand how your insurance company rates according to radius. Many insurance companies follow ISO rating but many other insurance companies go at it their own way.

Some companies have you rate on radius by having the requirement of classifying a vehicle based on the furthest destination. ISO looks at this way as well, but with one very important caveat.

If 80% of the trips are in a lower radius classification, you should use the lower rated classification. How should you disclose that to your underwriter?

You should use the lower radius as ISO suggests and have a note that says 20% or less or the trips are more than the radius indicated. In trucking insurance this is verified in the mileage or IFTA reports. One of the problems with mileage reports are that they are state mileage specific, and not formulated by radius. If there are miles in a certain state, the vehicle could be traveling trough more than one or two higher radius thresholds. So further underwriting relative to determining shippers and destinations is in order.

Radius underwriting in Trucking is an imperfect science. It is important to understand the ISO rule and whether the company you are submitting to concurs with the ISO 80% radius rule. How a company prices based on radius is probably as important a factor in underwriting and rating in the trucking insurance marketplace we are in.