What’s Included?
There seems to be a trend with fast food restaurants nowadays to have a lunch meal that includes several items. Wendy’s has a Biggie Bag, while McDonalds has Kids Meals and Dairy Queen has Combo Meals. With each option, you must look and ask, “What’s included in that meal?” The same question could be asked when it comes to Insurance class codes. The organization that most carriers use for risk classification is the Insurance Service Office or simply called ISO. You’ll hear ISO form or ISO class code used every day. But what’s included in an ISO classification?
First, the purpose of the classification system, according to Rule 25 of the ISO Commercial Lines Manual, is to “group insureds into classifications so that the rate for each classification reflects the hazards common to those insureds.”
Another purpose of the ISO classification system is to describe the industry of the insured. It’s a 5-digit code and here’s a list of codes:
- Manufacturing or Processing – codes 50000 to 59999
- Contracting or Servicing – codes 90000 to 999999
- Mercantile – codes 10000 to 19999
- Building or Premises, office or space leased – codes 60000 to 69999
- Miscellaneous – codes 40000 to 49999
Using the above system and apartment is code 60010 so it starts with a “6.” A logger is 97111 so it starts with a “9.”
Lastly, each code has a definition, and we don’t have time to dig into that but be sure the code you use matches the insured operation(s) as this is critical when it comes to audit time. ISO definitions come into play when auditors are reviewing an insured’s operation.
When reviewing your client’s risk, be sure to ask “what’s included” in their work. It may help to discuss this with them over a happy meal, a biggie bag, or some other type of combo meal.
