This is Part IV of our seven-part series on Understanding Rule 85. In this series, we delve into the intricacies of Rule 85 and its implications for property insurance.
In the world of insurance, not every building fits into the same mold. Some are small, simple, and relatively low-hazard – these are the buildings typically class-rated.
But what exactly defines these types of buildings, and how do they fit into the Rule 85 framework? Let's break down the characteristics of these class-rated structures and explore what makes them unique.
Characteristics of class rated buildings
Class-rated buildings share common characteristics that make them suitable for class rating under Rule 85. These are usually smaller, more homogenous structures with low hazards, including limited fire risks and less complex layouts. The simplicity of these buildings is what allows them to fall into broader categories for rating purposes, rather than requiring individual building-specific analyses.
Size: Class-rated buildings are typically smaller, often under five stories. These buildings usually don’t have extensive square footage or complex designs.
Construction: Most class-rated buildings are built using straightforward construction types like frame or joisted masonry. Their construction features are standard, with minimal variation from building to building.
Low Hazard: These buildings generally pose low risks in terms of fire and other hazards. A low-hazard designation typically comes from the absence of specialized equipment or hazardous materials.
Small vs. bigger building rules
While class-rated buildings tend to be smaller, it's important to note that size isn’t the only factor. Larger buildings, such as those that are still relatively low-risk but feature multiple stories, may also qualify for class rating under certain conditions. The difference between small and bigger buildings can be influenced by local building codes, the materials used in construction, and the building’s intended use. However, once a building exceeds a certain complexity, it might be subject to specific rating rather than class rating.
Eligible class codes
Class codes define the range of buildings that can be class-rated. These codes help insurers categorize different types of buildings based on their characteristics and the risks they pose. Typical eligible class codes for class-rated buildings might include:
- Retail spaces (e.g., strip malls, small retail stores)
- Small office buildings (e.g., single-story professional buildings)
- Light industrial or warehouse buildings (e.g., storage facilities with minimal fire risks)
- Low-rise apartment buildings (e.g., residential buildings with fewer than five stories)
Conclusion
Class-rated buildings represent run-of-the-mill, everyday structures that insurance companies encounter regularly. Their simplicity in design and low hazard levels allow them to be grouped together for rating purposes, streamlining the process and making it easier for insurers to assess the risks involved. Understanding the traits that define a class-rated building is key to making informed insurance rating decisions.
