How NAICS Codes Are Used in Insurance
NAICS Codes in Underwriting
Insurance underwriters use NAICS codes as a primary factor in risk assessment. Your NAICS code tells the underwriter what industry you operate in, which directly influences the types of risks your business faces, the probability of claims, and ultimately your premium rates. A wrong NAICS code can mean overpaying for coverage or — worse — having insufficient coverage for your actual business activities.
How NAICS Affects Your Premiums
Different NAICS codes carry different risk profiles. A software consulting firm (541512) has a very different risk profile than a structural steel contractor (238120). Insurance companies maintain loss history data by NAICS code, allowing them to calculate expected claim frequencies and severities for each industry. Being classified under the wrong code can significantly impact what you pay.
Common Insurance Lines by Industry
General Liability (GL): Required by nearly all businesses, but premiums vary dramatically by NAICS code. Construction codes carry much higher GL rates than professional services codes. Workers' Compensation (WC): Rates are based on occupational hazard, closely tied to your NAICS classification. Commercial Auto: Especially relevant for transportation, delivery, and field service NAICS codes. Professional Liability (E&O): Critical for professional services NAICS codes (54xxxx). Property Insurance: Rates influenced by NAICS codes that involve hazardous materials, heavy equipment, or fire risk.
Verifying Your Insurance NAICS Code
Review your current insurance policies to check which NAICS code your carrier has on file. If it doesn't match your primary business activity, contact your agent or broker to update it. A more accurate NAICS code may reduce your premiums if your actual business carries lower risk than what you're currently classified under. Use the trueNAICS company search tool to see what NAICS code data providers assign to your business based on actual evidence.
Frequently Asked Questions
Can my insurance premium change if I update my NAICS code?
Yes. If your current NAICS code represents a higher-risk industry than your actual business activity, correcting it could lower your premiums. Conversely, if you're underclassified, updating may increase costs but ensures you have appropriate coverage.
Do insurance companies use SIC or NAICS codes?
Most modern insurance platforms use NAICS codes, but some legacy underwriting systems still rely on SIC codes, IBC codes, or NCCI codes. Many carriers cross-reference multiple classification systems. trueNAICS shows you the crosswalk between all these systems.
Try it now — Search for a NAICS Code
Look up any NAICS code by company name, business activity, or code number.