NAICS Business Classifications
While the size of the business and state of primary operation contribute to the policy cost, the risk of insuring a business most affects the premium. Insurers have classifications for each type of business, and one business’s insurance will cost less or more than another type of business. Risk degrees are calculated and the amount of coverage determined by type of business being operated and its activities.
Each insurance company will assess a risk degree, and thus a rate, differently. The North American Industry Classification System (NAICS) has assigned Standard Industrial Classification Codes (SIC) by trade. The codes promote better communication within the U.S. Securities and Exchange Commission. Once assigned, the SIC code remains the same regardless of insurance company.
