How Insurance Companies Use SIC Codes
(Industry Classifications)

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Learn how insurance companies use SIC codes to classify your industry and calculate your premiums. Commercial insurers use SIC codes to determine if your business is in a high risk industry classification and to determine your premium.

How Insurance Companies Use SIC Codes

How Insurance Companies Use SIC Codes

What's the best way to describe your company's business operations? What type of industry are you involved in? What kinds products or services do you sell? These are some of the questions asked by commercial insurance companies when trying to classify your business by Standard Industrial Classification (SIC) code.

An SIC code is a four digit numerical code assigned by the U.S. government to businesses in order to identify the primary activity of the business. The first two digits of the code identify the major industry group, the third digit identifies the industry group and the fourth digit identifies the industry.

But how does your business classification affect your premiums and insurance cost? Let's look at some of the the issues around how insurance companies use SIC codes.

Business SIC Codes

How insurance companies use SIC codes. Although the NAICS classification system was adopted in 1997, insurers selling commercial insurance use SIC codes in many ways - to analyze and classify the businesses they insure, or choose not insure. Industry codes help insurers with several analytical processes involving marketing, underwriting, exclusions, loss control, forms, pricing and other operations.

Some small business sic code classifications can result in you paying higher premiums for your business insurance. It is important that your business is classified properly.

SIC Division Structure

Following is a list of all the Major Groups of SIC codes. Click on the linked groups to drill down to the four digit codes:

A. Division A: Agriculture, Forestry, And Fishing

This division includes establishments primarily engaged in agricultural production, forestry, commercial fishing, hunting and trapping, and related services.

B. Division B: Mining

This division includes all establishments primarily engaged in mining.

C. Division C: Construction

This division includes establishments primarily engaged in construction. The term construction includes new work, additions, alterations, reconstruction, installations, and repairs.

D. Division D: Manufacturing

The manufacturing division includes establishments engaged in the mechanical or chemical transformation of materials or substances into new products.

E. Division E: Transportation, Communications, Electric, Gas, And Sanitary Services

This division includes establishments providing, to the general public or to other business enterprises, passenger and freight transportation, communications services, or electricity, gas, steam, water or sanitary services, and all establishments of the United States Postal Service.

F. Division F: Wholesale Trade

This division includes establishments or places of business primarily engaged in selling merchandise to retailers; to industrial, commercial, institutional, farm, construction contractors, or professional business users; or to other wholesalers; or acting as agents or brokers in buying merchandise for or selling merchandise to such persons or companies.

G. Division G: Retail Trade

This division includes establishments engaged in selling merchandise for personal or household consumption and rendering services incidental to the sale of the goods.

H. Division H: Finance, Insurance, And Real Estate

This division includes establishments operating primarily in the fields of finance, insurance, and real estate.

I. Division I: Services

This division includes establishments primarily engaged in providing a wide variety of services for individuals, business and government establishments, and other organizations.

J. Division J: Public Administration

This division includes the executive, legislative, judicial, administrative and regulatory activities of Federal, State, local, and international governments.

How Insurance Companies Use SIC Codes - The Bottom Line

We hope this article on underline;">how insurance companies use SIC codes has been informative. Your classification determines how much you pay for your business insurance and much more.

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