Many properties are mixed-use. Perhaps the most common is the building – common on every high street – which has a shop downstairs and flats above.
Other possibilities might include a doctors’ surgery on the ground floor and living accommodation above; or a pub at street level and rooms for overnight guests and the landlord’s living accommodation overhead. Many inner-city developments are currently built with mixed commercial and residential demands specifically in mind – as property developers Skanska explain.
Your property insurance needs to reflect the very different uses to which each part of the building is put. We have described the various risks you may face as the owner of commercial property, on the one hand, and those you presented to any homeowner on the other.
Not only does your insurance need to reflect the different uses, but also whether you are letting either the commercial or the residential part of the premises to tenants.
It is essential to arrange the appropriate type of insurance for the different commercial and residential uses of the building, as well as its occupation by either you or your tenants. Get it wrong and you might find your insurance cover invalid when it comes to making a claim.
Insurance for mixed-use property
Mixed commercial and residential building insurance is needed to safeguard your investment in property which is used in part for commercial purposes (as a shop, an office, doctors’ surgery or pub) and, in the other part, as living accommodation.
Insurance for mixed-use premises also needs to reflect the possibility of your using part of the development from which to run your own business whilst assuming the role of landlord for tenants in the residential part of the building.
In short, mixed commercial and residential building insurance must be tailored to meet even more combinations of possibilities than either commercial insurance or residential insurance – for either owner occupiers or for landlords – alone.
It makes insurance for mixed-use property even more complicated and involved than usual. For that reason, you might want to consult a specialist provider, such as ourselves here at UKinsuranceNET, before arranging cover for any such investment.
What does it cover?
The entire structure and fabric of the building – including the parts in both commercial and residential use – need to be covered against major perils (such as fire or explosions, storm damage and flooding) which may result in its total loss. The total building sum insured, therefore, must provide sufficient cover for complete reconstruction in the event of a major disaster.
Any of your contents of the building also need the protection of insurance to cover repair or replacement in the event of theft, loss or damage (including the possibility of malicious damage committed by your tenants).
As the property owner, you also face liability for injuries or property damage suffered by your own customers, visitors, neighbours and members of the public together with additional landlord responsibilities and obligations to safeguard your tenants against injury and damage to their property.
Mixed-use landlord insurance is also designed to offer compensation for your loss of rental income in the event of a major insured event which makes either the commercial premises or the let accommodation temporarily uninhabitable. If you are occupying the residential accommodation at the time, this may take the form of cover for the cost of an alternative place to live.