What are general liability class codes?
General liability (GL) class codes are numerical codes used by insurers to categorize businesses based on their operations and risk level, which helps determine general liability insurance premiums and coverage.
Knowing how insurance classification codes work can provide insight into how insurers evaluate businesses and calculate insurance costs.
How do general liability class codes work?
When you apply for general liability insurance, insurers review the type of work you do and assign class codes that reflect your operations. GL class codes create a standardized way to classify businesses with similar risks.
Once assigned, general liability class codes help insurers:
- Classify your business during underwriting and align coverage with your work
- Determine your insurance cost
- Provide context about your business when evaluating claims
- Guide policy reviews and adjustments as your business changes
- Support consistent evaluation of similar businesses
Depending on the work you do, your insurer may assign multiple class codes for general liability to reflect different parts of your business.
Who assigns general liability insurance class codes?
General liability class codes are usually assigned by your insurer during the underwriting process. The information you provide helps classify your business and assign a code that reflects the work you perform, including details about your:
- Industry
- Type of work
- Years in business
- Number of employees
- Revenue and payroll
- Business location
- Claims history
How GL class codes affect your insurance costs
General liability class codes are one factor insurers use to calculate your premium. Each code reflects a different level of risk, and higher-risk work typically costs more to insure because claims may happen more often or be more expensive.
We'll help you understand these classifications so you can choose coverage that fits how you actually work. Start a quote for general liability insurance to see how much a policy could cost for your business.
Insurance class codes can change as your business grows
If you expand your business, your general liability class codes may need to be updated. Adding new services, taking on different types of work, or changing how and where you operate can all affect your classification and insurance needs. Periodically reviewing your operations and coverage can help ensure your policy continues to reflect your business.
Insurance class code examples
General liability class codes are typically five-digit numbers used to classify businesses based on their work and level of risk. Even within the same industry, businesses may have different codes.
Here are some common business categories and how differences in risk can affect classification:
Retail and wholesale businesses
Retail and wholesale businesses are classified based on factors like the products they sell, sales volume, and number of employees.
Example: A small clothing shop (11127) may have lower risk than a hardware store (13716) selling tools and industrial equipment.
Contractors and trades
There are dozens of class codes for contractors and trade workers that are related to specific types of jobs, services, and industries.
Example: Roofing contractors are classified depending on whether they work on buildings with three stories or fewer (98678) or buildings with more than three stories (98677).
Service-based businesses
Businesses that provide services at customer locations or use specialized equipment may have higher risk than those working in more controlled environments.
Example: The risks facing a pool cleaning business (99505) working around water, chemicals, and equipment may be greater than those of a photographer (16471) working in a studio.
Professional and office-based businesses
Professional and office-based businesses may have different classifications depending on where they work and how they interact with clients.
Example: A lawyer (66122) working in an office may face different risks than a real estate agent (47050) who shows houses and transports clients.
Restaurants and food service
Restaurants are classified based on what they offer and how food is prepared and served.
For example, a restaurant may be categorized as:
16900: Restaurants with table service but no alcohol
16901: Restaurants with seating but no alcohol and no table service
16902: Restaurants with no alcohol and no seating
16910: Restaurants with table service and alcohol sales under 30% of annual receipts
Restaurants aren't the only businesses with specialized classifications. Explore commercial insurance options by profession to learn more about coverage and insurance requirements for your industry.
What happens if your business is misclassified?
If your business is assigned the wrong business insurance class code, it can affect both your coverage and costs. Since class codes help insurers evaluate risk and price coverage, misclassification can lead to:
- Incorrect premiums: You could end up paying too much or too little for your coverage.
- Claim issues: Your policy may not accurately reflect your business operations.
- Audit adjustments: You may owe additional premiums or receive a refund for overpayments.
- Policy changes: Inaccurate classifications may require updates to your policy.
Review your policies regularly and notify your insurer if your business operations change to help ensure your classification remains accurate.
GL class codes vs. other business classification systems
The Insurance Services Office (ISO) develops standardized GL class codes that are often used as a starting point when classifying businesses. Insurers may also use their own classification systems or adjust codes based on a business's specific operations.
In addition to GL class codes, you may see other classification systems used across insurance and business reporting:
- ISO general liability class codes: Standard codes used by insurers to categorize businesses based on the risk of causing third-party injury or property damage.
- NAICS codes: North American Industry Classification System (NAICS) is defined by the federal government and groups businesses by industry and economic activity for underwriting, reporting, and benchmarking purposes.
- SIC codes: Standard Industrial Classification (SIC) codes are a long-standing classification system of business types that's used by the government for analysis and regulatory oversight.
- Workers' compensation class codes: The National Council on Compensation Insurance (NCCI) provides class codes that categorize employee job duties and workplace risk for workers' compensation insurance.
Frequently asked questions about general liability class codes
What are general liability insurance class codes?
A general liability class code is a number used by insurers to categorize similar businesses. The class code reflects the risks a business typically faces so insurers can determine coverage and pricing.
How do I know if my GL classification codes are correct?
Your insurance class codes should reflect your actual day-to-day operations. It's a good idea to review your classification and coverages regularly to be sure your policy fits your needs.
Why did my insurance company change my class code?
Your insurer may update your class code if your business operations change or new information becomes available during underwriting or an audit. Adding services, changing how you operate, or expanding into new areas can all affect your classification.
Are general liability class codes standardized?
Many general liability class codes are based on standards developed by the ISO. Insurers may adjust them or use their own codes so classifications can vary depending on the insurer.
How do class codes affect insurance cost?
Insurance class codes help determine how much risk your business presents. Higher risk typically means higher premiums, while lower-risk operations may cost less to insure.
Can a business have more than one class code?
Yes, multiple GL class codes can be assigned to businesses with mixed operations that offer different types of products or services. Each code reflects the activities and risks associated with a specific part of the business.
What happens if my class code is wrong?
An incorrect class code can affect your coverage and premium. You may pay too much or too little, and it could lead to coverage issues or adjustments during an audit.
How do I find my insurance class code?
Your class code is usually listed on your insurance policy documents. If you're unsure, your insurer or agent can help explain your classification and confirm it's accurate.
Why choose Progressive Commercial for general liability
Progressive Commercial has over 50 years of experience helping business owners find coverage that fits their operations. With flexible policy options and support from licensed agents, you can get general liability insurance that meets your needs.
When you get a quote online, you can explore options at your own pace and get your insurance rate in minutes. Prefer to talk it through? Call our insurance experts for additional support.
