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Understanding Rule 85 – Class-Rated Risks

April 18, 2014

BuildingRule 85 in the Washington State Commercial Lines Manual deals with class- and specifically rated risks. Class-rated risks are buildings with occupants that can be fit into a similar category due to their similar exposures to loss and probability of sustaining damage. Certain assumptions are made about buildings and occupants placed in this category. Specifically rated risks are not eligible for class rates and have unique operations, hazards, or other conditions not allowing them to be class rated. These risks also tend to be much larger and more hazardous (check out our previous posts here and here to learn more!).

Washington State recently changed our rules for how we look at class-rated and specifically rated risks. Depending on which filing your company has adopted, different rules will apply.

Let’s take a look at a building and see how to apply these rules:

Example: Juan owns a 1-story, 6,200 sq. ft. grocery store with no cooking on the premises, and he is the sole occupant in the building. A recent WSRB inspection has determined that it has 33 ½% combustible walls, with the remainder of the building having 8-inch hollow masonry. The store is not sprinklered, has a fire hydrant within 300 feet, and has a recognized fire station within 5 road miles. Juan’s store is located in a Protection Class 5 district.

Based on the currently filed Rule 85, how should this building be rated? We must first answer a few questions:

  1. What is the construction class?
    • Juan’s grocery store is a construction class 1. Because it has more than 33 ⅓% combustible walls, it qualifies as frame.
  2. What is the CSP code of the building and its contents?
    • A grocery store with no cooking qualifies as an 0532
    • If you’re unsure how to decide, refer to your Commercial Lines manual, Division 5, Classification Table Pages. This particular occupant would be listed under “Grocery Stores.” Because it’s under 15,000 sq. ft., it will take the 0532 (if it were the sole occupant and over 15,000 sq. ft. it would classify as 0432).
  3. What is the Rating Type?
    • Because this building is less than 25,000 sq. ft., combustible, and a CSP 0532, this building qualifies for general class rates. Because it’s not a habitational occupant it can’t qualify for the habitational class rate, and it’s not specifically rated due to its occupant, size, and construction.
  4. What is the RCP?
    • The RCP for this building would be 2105.
      • 2: This means it’s a class-rated building.
      • 1: This means it’s a construction class 1 (frame).
      • 05: This means the PC at the risk is a 5.

So how does this differ (if at all) from the previous Rule 85? The previous Rule 85 had a 5,000 sq. ft. limit on class-rated buildings. Because of this, Juan’s grocery store would have been specifically rated (his is 6,200 sq. ft.). The RCP would then be 1105.

WSRB will do inspections on both specifically and class-rated risks to help you determine the most appropriate loss cost for your tenant and/or building owners. Agents of subscribing companies and subscribers can order these inspections at no cost! Be sure you’re getting the most appropriate price for your customers!

 

Article by: Kristen Skinner

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