A key component of audit processing is classification of the risk.  Classification changes at audit can impact the final premium and your agency’s profitability.   To assist you, we have provided these helpful tools to assigning classification.

When an insured is engaged in the management of rental or retail property, there are two primary class codes that deal with the duties of the employees: 9012  and 9015.

9012-Buildings Operation by Owner, Lessee or Real Estate Management Firm – Professional Employees, Property Managers, and Leasing Agents & Clerical/Salespersons. Responsibilities include the administrative duties such as clerical, property managers, outside sales staff, leasing agents, and model home hosts.  If there are property managers, who are not on payroll but receive free rent or rent reduction, the amounts are included costs under classification 9012.

9015-Buildings Operation by Owner, Lessee, or Real Estate Management Firm All other employees.  Reponsibilities include all other employees including janitorial, maintenance, and overall operations of the buildings.  This staff must be performing janitorial/maintenance of the buildings in order for the class code to apply.  If they are engaged in any new construction/alterations, such as painting or HVAC, then those codes apply if they do not engage in janitorial work.  If the insured hires temporary labor to perform construction tasks such as painting or plumbing, then they must be classed accordingly if they are not separately insured.

When an insured is engaged in the management of rental or retail property for others, there is a main class code that applies.

47052-Real Estate Property Managed.  The classification is only used when the property managed is owned by another insured.  The property managed can not be owned by the insured.  The property management company will perform maintenance of the buildings and surrounding properties, janitorial, elevator operation, collecting rents, and locating future tenants.  The basis for the class code is only the receipts from the building(s) and premises managed by the insured.  If the property management company hires subcontractors, they are not separately classified.

If the property is owned by the insured, the applicable classification would be based upon area of the building(s) in question under the 60000 codes.

It is the job duties performed by the individual that determines classification and not the job title.  For additional clarification, contact our Audit Team at extension 2586 or your Underwriter.