NAICS codes (North American Industry Classification System) and SIC codes (Standard Industrial Classification) are numerical industry identifiers that commercial insurers use to classify your business, set premium rates, determine coverage eligibility, and flag exclusions. NAICS uses six digits; SIC uses four. Both systems remain active in U.S. commercial P&C underwriting.
Who this is for: Business owners applying for commercial general liability, workers' compensation, or business owners policies who need to understand why their industry code matters to their premiums and coverage.
TL;DR — Key Takeaways
- NAICS (6-digit) replaced SIC (4-digit) for federal purposes in 1997, but insurers and many state workers' comp bureaus still use SIC codes heavily.
- Your NAICS or SIC code is one of the first things an underwriter checks — it can determine whether a carrier will write your business at all.
- A wrong code — even an honest mistake — can lead to a voided policy, a mid-term cancellation, or a denied claim.
- Contractors, manufacturers, and staffing firms face the highest risk of misclassification because they span multiple codes.
- You can look up your code for free through the U.S. Census Bureau (NAICS) or OSHA/SEC (SIC) — no account required.
What Is the Difference Between NAICS and SIC Codes?
Both systems categorize businesses by their primary economic activity, but they were built in different eras for different purposes.
| Feature | SIC Code | NAICS Code |
|---|---|---|
| Digits | 4 | 6 |
| Created | 1937 | 1997 |
| Governing body | U.S. OMB (historical) | U.S. Census Bureau / Statistics Canada / INEGI |
| Still used by | SEC, state workers' comp bureaus, many commercial insurers | Federal agencies, BLS, SBA, many modern underwriting platforms |
| Granularity | Broader industry buckets | More specific sub-industry detail |
| Insurance relevance | High — legacy rating manuals still reference SIC | Growing — newer underwriting systems use NAICS |
| Example: roofing contractor | SIC 1761 | NAICS 238160 |
| Example: IT staffing | SIC 7363 | NAICS 561320 |
Key takeaway: Neither system has fully replaced the other in the insurance world. When you apply for commercial coverage, you may be asked for one or both. If your agent asks for your "business class" or "industry code," they almost certainly need your NAICS or SIC (or both).
Why Do Insurance Underwriters Care About NAICS and SIC Codes?
Underwriters use industry codes as the starting point for risk classification. The code tells the underwriter what type of work you do, which drives three underwriting decisions:
- Rate selection — Every classification code maps to a loss cost multiplier. A janitorial company (SIC 7349) faces very different slip-and-fall exposure than a software firm (SIC 7372). The code routes you to the right rate table.
- Eligibility — Some carriers exclude entire SIC/NAICS categories. A contractor performing work on bridges (NAICS 237310) may be ineligible for a standard BOP; a software firm typically qualifies easily.
- Exclusion triggers — Policies sometimes incorporate SIC/NAICS language directly. A general liability policy might exclude operations described under a specific SIC range if those operations were never underwritten.
For workers' compensation specifically, insurers map SIC codes to NCCI class codes — the four-digit classification system used by the National Council on Compensation Insurance to set payroll-based rates. The SIC-to-NCCI crosswalk is not always one-to-one; a single SIC code may map to multiple NCCI codes depending on the specific job duties performed.
How to Find Your NAICS or SIC Code in 5 Steps
- Describe your primary revenue activity in plain language — what you sell or the service you provide that generates the most revenue. Use the activity that accounts for the largest share of your payroll and receipts if you do multiple things.
- Search the Census Bureau NAICS lookup tool at census.gov — enter keywords and browse the 2022 NAICS manual hierarchy (Sector → Subsector → Industry Group → Industry → National Industry).
- Cross-check with the OSHA SIC search at osha.gov/data/sic-manual — useful if your carrier's application specifically asks for SIC.
- Compare adjacent codes — read the "illustrative examples" and "exclusions" listed under each code. A roofing company that also does siding work should confirm which code covers the majority of their revenue.
- Document your selection — keep a written rationale on file (e.g., "We selected NAICS 238160 because >80% of revenue is from residential and commercial roofing installation"). This protects you at audit and during a claim dispute.
Tip for multi-trade contractors: If your business generates significant revenue across two or more SIC/NAICS categories (e.g., 40% roofing, 35% siding, 25% gutters), disclose all operations to your broker. Many GL policies require you to list all operations, and undisclosed operations can trigger a coverage exclusion.
How NAICS and SIC Codes Affect Your Insurance Premium
The practical impact varies by line of business:
| Line of Insurance | How the Code Is Used |
|---|---|
| Commercial General Liability (CGL) | Maps to an ISO GL classification code, which drives the per-occurrence rate per $1,000 of payroll or revenue |
| Workers' Compensation | SIC → NCCI class code → loss cost rate per $100 of payroll; experience mod (EMR) applied on top |
| Business Owners Policy (BOP) | Determines BOP eligibility; carriers publish "eligible SIC" lists |
| Commercial Auto | May be used alongside radius of operations to set fleet rates |
| Professional Liability / E&O | NAICS narrows the coverage form and sublimit options |
| Product Liability | SIC/NAICS drives per-unit or per-revenue rate for products exposure |
Premium example (illustrative only — not a guarantee): A roofing contractor (SIC 1761 / NAICS 238160) in Texas with $1.5M in annual receipts might see a CGL rate of $12–$22 per $1,000 of receipts, producing a base premium of $18,000–$33,000 before credits and surcharges. The same revenue base under a software consulting code (SIC 7372 / NAICS 541511) might produce a CGL base premium of $2,500–$5,000. The industry code is the single largest driver of that difference.
Real-World Example: Misclassification Costs a Contractor $48,000
This is an illustrative scenario based on common claim patterns — not a guarantee of any specific outcome.
A landscaping company in Georgia (primary SIC 0782, Lawn and Garden Services) also installs hardscape — patios, retaining walls, and drainage systems. When the owner purchased a CGL policy, the application listed only lawn maintenance. After a retaining wall failed and caused property damage to a neighboring lot, the carrier denied the claim. Their reasoning: hardscape installation maps to SIC 1771 (Concrete Work) and was not a disclosed operation. The undisclosed exposure voided coverage for that specific loss.
The owner paid $48,000 out of pocket for repairs and legal defense costs before the matter settled. Had the broker disclosed both SIC codes at inception — lawn maintenance (SIC 0782) and concrete/masonry work (SIC 1771) — the carrier could have rated both operations and the claim would have been covered. The additional premium for the hardscape classification would have been approximately $2,800/year.
Lesson: Disclose all operations, even secondary ones, and verify that your policy's covered operations language matches your actual SIC/NAICS profile.
FAQ
What is a NAICS code in simple terms?
A NAICS code is a six-digit number assigned by the U.S. Census Bureau that describes your business's primary economic activity. Insurers use it to classify your industry, assess risk, and set premium rates. For example, NAICS 238160 means "Roofing Contractors."
What is a SIC code in simple terms?
A SIC code is a four-digit number from the Standard Industrial Classification system (developed in 1937) that describes your industry. Despite being largely replaced by NAICS for federal purposes, SIC codes remain widely used by commercial insurers, state workers' comp bureaus, and the SEC.
Do I need both a NAICS code and a SIC code for insurance?
Often, yes — especially for workers' compensation and general liability. Some carriers' rating systems still reference SIC, while newer platforms use NAICS. Your broker will typically need both and will map between them as required.
Can the wrong NAICS or SIC code void my insurance?
Yes. If you provide an incorrect code — even unintentionally — and the misclassification results in underpriced premium or an undisclosed hazard, the carrier may deny a claim, cancel the policy mid-term, or rescind coverage from inception in cases of material misrepresentation. Always verify your code before signing an application.
Who assigns my NAICS or SIC code?
No single government body "issues" you a code. You self-select the code that best describes your primary activity. The U.S. Census Bureau publishes the NAICS manual; OSHA and the SEC publish SIC references. Your accountant, payroll provider, or insurance broker can help you identify the right one.
How does my NAICS/SIC code affect my workers' comp rate?
It doesn't directly — workers' comp uses NCCI class codes. However, NCCI class codes are mapped from SIC codes. Your SIC determines which NCCI class code(s) apply, and each NCCI class code carries a loss cost rate per $100 of payroll. The final premium is: payroll ÷ 100 × loss cost rate × experience mod (EMR) × carrier multiplier.
What if my business operates in multiple industries?
You should disclose all significant operations to your broker. For CGL purposes, underwriters rate each operation separately and may add a separate classification code to your policy. For workers' comp, multiple NCCI class codes may apply to different employee categories within the same company.
Where can I look up NAICS and SIC codes for free?
- NAICS: census.gov/naics — official 2022 manual with keyword search
- SIC: OSHA's SIC search at osha.gov/data/sic-manual and the SEC's full SIC list at sec.gov
Why Morrow for NAICS/SIC Classification and Commercial Insurance
- Independent agency, multiple carriers — Morrow shops your risk across multiple admitted and surplus lines carriers, finding markets that accept your specific SIC/NAICS profile rather than forcing you into a one-size-fits-all program.
- Classification expertise for complex operations — Multi-trade contractors, staffing companies, and manufacturers with mixed SIC exposures are exactly the accounts where misclassification risks run highest. Morrow's producers are trained to identify all applicable codes and disclose them correctly at submission.
- Fast COI and certificate turnaround — Once bound, Morrow provides certificate of insurance (COI) issuance typically within one business day, with the correct classification codes reflected on each certificate.
- Workers' comp crosswalk support — Morrow can walk you through the SIC-to-NCCI mapping for your specific payroll categories, helping you avoid over- or under-classification that affects both your premium and your EMR calculation.
- Real claims advocacy — If a carrier questions coverage based on a classification issue, Morrow advocates on your behalf, providing documentation of disclosed operations and premium-audit records to support your claim.
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Morrow (Afthonea Inc, DBA Morrow) is an independent commercial P&C insurance agency licensed in [Morrow to confirm: list of licensed states]. We place coverage with admitted and surplus lines carriers rated A- or better by AM Best. [Morrow to confirm: carrier panel, NPN, and review platform link.]
Related Pages
- Commercial Insurance Overview — parent pillar page
- Commercial General Liability Insurance — how CGL is rated by classification
- Workers' Compensation Insurance — NCCI class codes and EMR explained
- Business Owners Policy (BOP) — BOP eligibility by SIC code
- Insurance Glossary: Experience Modification Rate (EMR) — how your loss history adjusts workers' comp premiums
- Insurance Glossary: NCCI Class Codes — the workers' comp classification system that maps from SIC
About This Page
Author: Morrow Editorial Team, reviewed by a licensed commercial P&C insurance producer [Morrow to confirm: producer name and license number] Published: June 2026 Last updated: June 2026
Sources: - U.S. Census Bureau, 2022 NAICS Manual — census.gov/naics - U.S. Department of Labor / OSHA, SIC Manual — osha.gov/data/sic-manual - U.S. Securities and Exchange Commission, SIC Code List — sec.gov - National Council on Compensation Insurance (NCCI), Basic Manual for Workers Compensation and Employers Liability Insurance - Insurance Services Office (ISO), Commercial Lines Manual — classification and rating procedures - National Association of Insurance Commissioners (NAIC), Insurance Regulatory Information System (IRIS)