What insurance do you need for a mixed commercial and residential property?

If your property portfolio includes residential and commercial premises on the same site, you will know that the insurance requirements can be complex. You will need buildings insurance to cover the bricks and mortar, plus a mix of legal expenses insurance, rental protection, contents insurance, public liability insurance and employer’s liability insurance to cover what goes on within.

Why you might own a mixed-use property

There are many situations in which you might own a mix of property types within one building or site. You might run a business in commercial premises and decide to let out the flat space above. Alternatively, you might have a more substantial holding with a complex risk profile: several flats in a block plus commercial units used for such diverse purposes as a workshop using heavy machinery, a dental surgery or a gym. You might be responsible for shared spaces too, either in entrance lobbies, stairways and corridors or in the form of outside space.

This kind of property investment can prove highly valuable, and may be easier to manage than a more dispersed portfolio. However, bespoke insurance is usually required to reflect the unique risk profile of the multiple holdings. Stride Direct’s highly experienced team can help you find a policy that will give you excellent protection at a reasonable price.

The benefits of bespoke insurance

If you own a mixed-use property, you will probably have different agreements with different tenants, as well as service contracts relating to each property. It might be that you hold some units on a freehold basis and others as leasehold. Some units may have equipment or features which pose higher risk than others, such as machinery, impeded access or steep stairs.

Arranging bespoke insurance through an experienced insurance underwriter will help you ensure that the full range of risks you face are covered under your policy. If you take out multiple policies to cover your interests, these are not only likely to be more expensive but some risks could fall between the policies or liability between insurers may be open to interpretation.

Holding a single policy to cover your full risk profile can also make it easier to manage your costs and simplify the renewal process. With multiple policies, you may end up unwittingly paying different rates for the same type of risk, or missing key dates for renewal because you have so many of them to keep track of. With a bespoke policy, it is easy to understand what you have to pay and when.

Types of insurance to consider

There will be some types of insurance cover which are mandatory for you, for example if you have a mortgage over a property then your lender will almost certainly require you to hold valid buildings insurance. If you run a business in the premises and employ someone, you are probably obliged to hold employer’s liability insurance by law, which protects you if the employee is injured at work.

Other types of insurance are optional, but provide good value when you consider the risk. For example, rent protection insurance will provide cover if a residential tenant loses their job, or a commercial tenant enters insolvency. Legal expenses insurance can also save you a lot of cost and hassle if you need to evict a tenant or deal with a contractual dispute.

Public liability insurance is important to provide protection against claims that someone was injured or had property damaged on your site, for example by slipping down steps or having a loose roof tile fall on them. If disaster strikes and your property is damaged, for example by flood, fire or a storm, cover for re-housing costs for your business and residential tenants will save you a small fortune. It will also help you to keep tenants if you can offer alternative housing in this situation.

You may also wish to take out insurance against malicious or accidental damage. This type of damage is often excluded by policies, but persistent vandalism or a disgruntled former tenant can cause significant loss. Accidental damage can easily happen if a tenant accidentally leaves a tap on, or some of their equipment catches fire. If this happens, neighbouring tenants may also suffer disruption or damage. You could require tenants to have insurance against this risk, but your own cover is a valuable back-up.

Does your mixed property holding need the protection of a bespoke insurance policy? Why not talk to Stride Direct today on 
0800 840 6699.

Published: 7th August 2017
Need help finding the exact insurance for you? Get insured
Need help finding the exact insurance for you? Get insured