Most multimeters come with an 'installation category' (CAT) rating. The specification will be CAT I, CAT II, CAT III or CAT IV.
The CAT rating refers to what installation type the multimeter is safe to work on. Each category has been chosen based on expected transient over-voltages that may occur for each category.
The higher the expected transient over-voltage, the higher the category rating required of the multimeter.
The information below has been sourced from “Electrotechnology Practice” by Jeffery Hampson.
CAT I - Category I testing equipment is used on electronic circuits (signal level) and other low-energy equipment which has transient protection (isolation transformer). The testing equipment rated as Cat I must be marked with its actual voltage protection level.
CAT II - Category II testing equipment is used on energy consuming equipment such as portable appliances and power tools that are connected to a socket outlet.
CAT III - Category III testing equipment is used on an installation's distribution circuit and includes all mains circuit board equipment and devices connected after the kWh meters. Installation Category III also includes all fixed wiring circuits and permanently connected devices such as air conditioners, space heaters, hot water heaters and ranges.
CAT IV – Category IV testing equipment is for the highest level of electrical power and is suitable for measurements with respect to consumer's mains, power consumption meters and off-peak switching devices.
A point on CAT ratings;
Although the equipment may be rated to a particular category, it should be thoroughly inspected before use to ensure no damage exists that may compromise its insulation qualities.
Further to this, swapping leads on multimeters can be hazardous as the leads for a multimeter are specific to the CAT rating of the meter. By swapping leads between meters, you could inadvertently downgrade the category rating and be susceptible to transient voltages.