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Commercial Lines Rating Series: Part 5 – Rule 85

August 26, 2013

Frame ConstructionRule 85

Use this powerful tool to determine if a commercial building is eligible for class rating or if it must be specifically rated.

Located in Division 5 of the Commercial Lines Manual (CLM), Rule 85 also provides Basic Group I (BGI) loss costs for properties that are eligible for class rating.


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 and maintenance and typical construction.


Specific Rating – For risks that are not eligible for class rating.

  • If a risk is not eligible for class rating, it must be physically inspected and a specific Basic Group I loss cost developed.
  • Usually larger businesses or those involving more hazardous operations are specifically rated.


Basic Group I Loss Cost – Provides coverage for a particular group of perils. Those causes of loss are:

  • Fire
  • Lightning
  • Explosion
  • Vandalism
  • Sprinkler Leakage

(Remember – loss cost times company – filed and approved loss cost multiplier = rate.)


In order to determine a class loss cost, the following information is needed:

  • Construction of the building as defined in Rule 15 of the CLM or as indicated in Rule 85 if mixed construction
  • Area and height of the building
  • Public protection classification
  • The occupant of the building and the Commercial Statistical Plan (CSP) class code that reflects the occupant


The 3 categories addressed in rule 85 are:

  • General Class Rates
  • Habitational Class Rates
  • Special Class Rates


General Class Rates

Mercantile or non-manufacturing, warehouses and some light manufacturing risks are eligible for general class rates. There are area and height restrictions depending upon the occupant. And only certain CSP class codes are eligible.

For example, a retail store with 6,000 square feet and frame construction would most likely be eligible for class rating. However, the same retail shop that is of modified fire resistive construction would not be eligible for class rating.

There are also some occupants that are ineligible for general class rates. They are usually the more hazardous ones such as an auto body shop with spray painting.

There are area and height restrictions for class rating. Generally, buildings can’t be over 2 stories. Basements, sub-basements and mezzanines are not used when determining height and floor area.

There are exceptions to the height and area rules, of course.  For example, the height restriction does not apply to a building occupied as a church; and the square feet limitation does not apply to greenhouses.

Properties that are eligible to be rated under the following are not to be rated using general class rates:

  • Properties eligible for the Dwelling Policy Program
  • CLM Division Four, Farm
  • Habitational class rates as defined in Rule 85
  • Special class rates as defined in Rule 85
  • Sprinklered risks


If a building has multiple occupancies, there are rules to address how to assign the correct Basic Group I CSP class code.


Habitational Class Rates

Rule 85 shows specific occupants that are eligible for Habitational class rates. Apartments and Condominiums, Hotels and Motels, as well as Convents or Monasteries are examples of those occupants.

In general, light service occupants such as libraries or Offices and/or some mercantile occupancies are permitted to be included in the Habitational building. But be careful. There is a restriction on the amount of area they can occupy.

Ineligible occupancies are listed in the CLM. They are basically the same as those that are ineligible for General Class Rates.

As with General Class Rates, there are properties that are not eligible for class rating under Habitational class rates:

  • Properties eligible for the Dwelling Policy Program
  • CLM Division Four, Farm
  • Sprinklered risks – apply  to WSRB for consideration


Special Class Rates

There has to be a way to rate everything.

Special class rates are for property in the open and for special property that can’t be rated elsewhere.

Need to rate artificial turf or a swimming pool? This is where the Basic Group I rates/loss costs will be found.


(WSRB  10-1-2010 edition)

Please refer to Commercial Lines Manual, Division Five – Fire and Allied Lines for the complete rule.


Article by: Terry Krueger, Subscriber Administrator

Read more articles from our Commercial Lines Rating Series.

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