BLOCK OF UNITS CASE STUDY
16-Unit Block, Lake Macquarie Region
Five insurers declined outright. Settlement was four weeks away. Here's how we secured terms.
THE SITUATION
A property investor found us online through their own research while looking for insurance options for a 16-unit block they were purchasing in the Lake Macquarie region of NSW. The property consisted of four separate buildings, each containing four residential units.
The challenge was immediately clear: the property sat in a designated bushfire-prone area, the building sum insured was approximately $2.7 million, and settlement was scheduled for mid-January - just over four weeks away.
The property was a 2001-build with corrugated steel walls and Colourbond roofing. All 16 units were tenanted through a professional property manager, generating around $240,000 in annual rental income. The buyer's bank required a certificate of currency before they would release settlement funds.
OUR APPROACH
We knew from the first phone call that this wouldn't be a standard placement. The combination of bushfire exposure and unit count (more than 10) immediately rules out most retail insurers and even several commercial markets.
We prepared a detailed submission and approached seven insurers and underwriting agencies:
- One specialist market referred the risk, then declined on bushfire location
- Another declined on two grounds: bushfire-prone area and the block exceeding their unit-count appetite
- A mainstream insurer declined because the building sum insured sat above their threshold
- Two more markets declined after review - one outright, one after initially showing interest
- Descartes Underwriting - Provided terms, but the premium would have been approximately $100,000
- CHU Underwriting - Agreed to quote
Throughout this process, we kept the client informed of each decline and the reasons behind them. Transparency matters - they needed to understand why this was difficult and what we were doing about it.
THE CHALLENGES
The declines came quickly. Within 48 hours of submitting to the market, we had five rejections. The reasons were consistent: bushfire exposure, unit count exceeding appetite limits, or building sum insured beyond their thresholds.
Descartes Underwriting did provide terms - they're a specialist in parametric cover for hard-to-place risks. However, the premium would have been approximately $100,000, which wasn't commercially viable for a property generating $240,000 in annual rent. We had an option, but we kept searching.
The timing added pressure. With Christmas approaching, underwriters were winding down operations. We had a narrow window to secure terms before skeleton staffing would slow everything down.
THE OUTCOME
CHU Underwriting came through with terms that matched the client's requirements. Their appetite for non-strata residential blocks - even in bushfire zones - made them the right fit for this risk.
We secured a quote with comprehensive building and liability cover, ready to bind before the January settlement date.
The premium reflected the bushfire risk - there's no avoiding that in catastrophe-prone areas - but it was competitively priced compared to the $100,000 alternative we'd found through Descartes.
This case is a good example of why broker access matters. A property investor searching online would have hit the same brick walls we did with the first five insurers. The difference is knowing who to call next.
QUESTIONS FROM THIS PLACEMENT
Frequently Asked Questions
01Can a 16-unit block in a bushfire zone still get insurance?
02Why do insurers decline larger unit blocks?
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