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Commercial Lines Rating Series: Part 1 – Rating Commercial Property

January 7, 2013

Commercial buildingsRating commercial property is a multiple-step process.

Rating Factors

There are seven factors that control the premium development for commercial property:

  1. Coverage form (building, contents, business income, etc)
  2. Cause of loss form (Basic Form, Broad Form, Special Form, Earthquake Form)
  3. Construction of the building
  4. Occupancy of the building
  5. Location of the property
  6. Amount of insurance being written
  7. Applicable coinsurance requirement

Group I – Specific versus Class Rating

Commercial property can be either class rated or specifically rated. The rating mechanics are the same for both.

  • Specific Rating – For risks that are not eligible for class rating.
    • Property loss costs that apply specifically to a building and its contents are provided by WSRB in publications by street address.
    • Loss costs are developed as the result of an on-site inspection.
    • Usually larger businesses or those involving more hazardous operations are specifically rated.
  • Class Rating – Most businesses can be rated on a class basis.
    • Similar businesses have similar exposure to loss and similar probabilities of sustaining damage.
    • Exposures and probabilities are statistically analyzed, and loss costs are produced that reflect the chance of loss for a typical business in each class (CSP codes).

Class loss costs contemplate average conditions of occupancy (except as provided in Sub-Standard Condition Charges) and typical construction as defined.

Class loss costs can be modified to reflect how an individual business may differ from others in its class. Refer to Rating Plans such as Individual Risk Premium Modification Plan (IRPM) and Deductible Insurance Plan for more information.

Washington loss costs in the Commercial Lines Manual (CLM) are shown at protection class 5 and at a general location within the state.


  • protection class multiplier to provide for the protection class of the property being rated.
  • territorial multiplier to provide for the area in which the property is located.


Read more articles from our Commercial Lines Rating Series or other Insurance Policy Rating issues. 

Have a rating question? Ask us in our comment section below.


Article by: Terry Krueger, Subscriber Administrator

For more information on commercial lines rating visit us at

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