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What is an IP rating?

IP stands for Ingress Protection.
International Electrotechnical Commission - IEC 60529 "Degrees of protection provided by enclosures (IP Code).". NEMA offers a similar rating system.

Definition of degree of protection (IP code)

IEC 60529 outlines an international classification system for the sealing effectiveness of enclosures of electrical equipment against the intrusion of foreign bodies (e.g., tools, dust, fingers, and moisture) into the equipment. This classification system utilizes the letters IP (Ingress Protection) followed by two digits.

Degree of protection - First digit

The first digit of the IP code indicates the degree that the connector is protected against contact with moving parts, as well as the degree to which equipment is protected against solid foreign bodies intruding into an enclosure:
0 No special protection. 
1 Protection from a large part of the body such as hand or from solid objects greater than 50 mm in diameter. 
2 Protection against objects not greater than 80 mm in length and 12 mm in diameter. 
3 Protection from entry by tools, wires, etc., with a diameter or thickness greater than 2.5 mm. 
4 Protection from entry by solid objects with a diameter or thickness greater than 1.0 mm. 
5 Protection from the amount of dust that would interfere with the operation of the equipment. 
6 Dust-tight.

Degree of protection - Second digit

The second digit indicates the degree of protection of the equipment inside the enclosure against the harmful entry of various forms of moisture (e.g., dripping, spraying, submersion, etc.).
0 No special protection. 
1 Protection from vertically dripping water. 
2 Protection from dripping water when tilted up to 15°. 
3 Protection from sprayed water. 
4 Protection from splashed water. 
5 Protection from water projected from a nozzle. 
6 Protection against heavy seas, or powerful jets of water. 
7 Protection against temporary immersion. 
8 Protection against complete continuous submersion in water (up to 1 meter deep for 15 minutes).