When planning new real estate construction, it’s helpful to understand common construction material types. Beyond the cost of materials and the associated long-term maintenance, there are implications for insurance underwriting in the event of a fire. A little knowledge and advanced planning will help you anticipate and manage insurance costs—now and in the future.
Insurance underwriters rely on the insurance tools and analytics provided by the Insurance Services Office, Inc. (ISO). For commercial construction, ISO grades buildings and assigns a construction “class” based on the impact of a loss due to fire. Construction classes consider materials used, the percentage of each type of materials used and the amount of damage a building is likely to sustain if exposed to a fire.
ISO construction classes rank from 1 to 6 based on combustibility or fire resistance. Class 1 is the least fire resistive; Class 6 is the most fire resistive. Following is a high-level description of the six classes of commercial real estate construction established by ISO for rating and insuring commercial property.
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Class 1: Wood frame
ISO defines this class as structures with exterior walls, floors and roofs made up of combustible construction and buildings with outer walls of non-combustible and/or slow-burning construction made up of combustible floors and roofs (including brick veneer or metal-clad exterior used for appearance versus support). While frame construction is economical and easy to erect and alter, it is the most susceptible to damage due to fire and allows a fire to spread quickly.
Class 2: Jointed masonry
This class includes buildings comprised of exterior walls constructed of masonry or a fire-resistive construction rating of not less than one hour and with flammable or combustible flooring and roofs, including heavy timber or mill construction. (Fire-resistive time ratings refer to the number of hours a structure can withstand a fire simulation test.) Construction material types include brick, tile, stone and concrete. This construction class is harder to ignite but still highly susceptible to damage by fire.
Class 3: Non-combustible
Just as it sounds, this class describes buildings with outer walls, floors and roofs of non-combustible or slow-burning materials. Like Class 1 wood frames, non-combustible construction is economical and easy to erect. Conversely, this construction type typically contains steel, which loses strength at high temperatures creating unstable situations, and uses slow-burning materials which serve as fuel for the fire.
Class 4: Masonry non-combustible
ISO defines this class of buildings as having exterior walls constructed of masonry—not less than four inches thick—or buildings having exterior walls with a fire-resistive rating of not less than one hour. Also included are slow-burning or non-combustible flooring and roofs, irrespective of the insulation type used for the roof’s surface. Masonry non-combustible is highly stable and less likely to collapse during a fire. Like Class 3 non-combustible, unprotected steel becomes less stable and more damageable at high temperatures, and slow-burning materials fuel the fire.
Class 5: Modified fire resistive
Class 5 is building construction that uses fire-resistive materials such as masonry and protected steel materials not less than 4 inches thick. It has a fire-resistive rating of less than two hours but more than one hour. Many high- and mid-rise buildings fall into this class. Using non-combustible materials accommodates greater height than other classes and uses load-bearing assemblies that resist fire damage. These materials are more expensive—both for construction and repair.
Class 6: Fire resistive
The highest class of ISO-rated construction types includes solid or hollow masonry and reinforced concrete with varying degrees of thickness and fire-resistance ratings of not less than two hours. Typical Class 6 structures include high-rise buildings and parking garages. While Class 6 is deemed most safe, it is expensive to construct and repair and may provide a false sense of security for occupants as there is still a risk of fire in all types of commercial construction.
GNP’s commercial real estate development team recommends engaging the architect and an insurer in the early stages of a project to assess the financial impact of construction materials. While an architect will adhere to building codes, zoning and structural makeup, there is always some flexibility in the choice of building materials. Understanding the likely impact on insurance underwriting for construction and operating costs helps inform the decision-making process in commercial real estate construction. Contact us today to learn more about commercial property construction.
