Workers' Comp & Auto · Insurance Term
Classification Code (Class Code)
Definition
A classification code, or class code, is a numeric code that groups businesses or jobs by type of work so insurers can rate them. Workers' compensation and general liability policies use class codes to set rates per unit of payroll, sales or area.
In Plain English
In workers' compensation insurance, each employee's payroll is assigned to a class code that reflects the hazard of the work. A maintenance technician and an office manager usually fall under different codes with very different rates.
General liability policies also use class codes, often rated by square footage, sales, units or payroll. An apartment complex, a strip center and a gas station each have different codes.
Wrong codes cause wrong premiums. A premium audit at the end of the term can reclassify payroll and lead to an additional bill or refund. Your experience modification rate is applied on top of these rates.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: a property management company lists all payroll as clerical. At audit, the insurer finds two employees do repairs and reclassifies their payroll to a higher-rated code, producing an additional premium.
What to Watch For
- Review the class codes on your policy and make sure they match your actual operations.
- Separate payroll for different job types in your records.
- Tell your agent when duties or operations change.
- Ask for an explanation of any reclassification after an audit.
Last updated October 14, 2026 · Primesure editorial team · How We Write