What is a primary characteristic of specific rates?

Specific rates are fundamentally individualized and tailored to suit a particular building or operation. This means that they are based on the distinct attributes, conditions, and risk factors associated with that specific location or business. Such characteristics may include the structure's age, construction materials, occupancy type, and any unique risks tied to its operations.

This individualized approach allows insurance companies to more accurately reflect the actual risk of insuring a particular entity, which can differ significantly from general class rates that apply to broader categories of similar risks. The focus on specific rates acknowledges that even two buildings within the same classification can present very different risk profiles based on individual circumstances.

While class rates and broad classifications are related concepts, they do not apply to specific rates, which are uniquely assessed. By understanding that specific rates are grounded in unique operational risks, one can see how they differ from more generalized and categorical rate structures.