Mixed-Use Strata, Six Units

A six-unit mixed strata scheme in South-East Queensland needed insurance. The building had four residential units and two commercial tenancies. One was a food outlet with a full commercial kitchen (deep fryer, rangehood, coolroom). The other was a tobacconist in the process of converting to a convenience store.

The scheme had two owners (family members) with a body corporate structure in place and a building sum insured of approximately $2.3 million.

On paper, this was a compounding underwriting problem. Tobacconist tenancies are one of the most difficult occupancy types in strata insurance. A commercial kitchen with deep-frying operations is another. Having both in a single six-unit scheme meant most insurers would decline before reading past the tenancy schedule.

We knew this placement would need specialist markets, so we worked through it step by step. We started with mainstream strata underwriters to exhaust the standard options, then moved to specialist and AR network channels.

We submitted to multiple underwriters. Several declined immediately based on the tenancy mix. Others cited the building's age or the food tenancy as additional concerns. One specialist strata insurer referred the risk but couldn't proceed through our AR network because their product rules required all other market options to be exhausted first. We understood that requirement and worked around it.

We presented the tobacconist's conversion to convenience retail as a risk-mitigation factor, providing documentation of the planned transition to each underwriter we approached.

The core challenge was the combination of risk factors in a single small scheme. A tobacconist alone is enough to trigger a decline from most strata underwriters. A commercial kitchen with deep-frying operations independently raises concerns about fire risk. Together, in a six-unit building, they created what underwriters saw as a concentrated exposure.

Building age was a secondary factor. Some underwriters who might have tolerated one difficult tenancy weren't prepared to take on the combination in an older building.

The body corporate also needed to balance affordability with the reality that their tenancy mix put them in a specialist insurance bracket. Standard strata pricing simply wasn't going to apply.

We obtained formal terms from a specialist insurer. They were the only underwriter in the market willing to quote on the full risk profile. The premium came in at approximately $48,000, which reflected the genuine difficulty of insuring this combination of tenancies.

For body corporates with tobacconist or commercial kitchen tenancies, the value of a broker isn't always about finding the cheapest premium. Sometimes it's about confirming that coverage exists, understanding the cost of a difficult tenancy mix, and giving the owners the information they need to make good decisions about their tenancies.