MIXED-USE PROPERTY CASE STUDY
Jeweller Below, Owners' Home Above, Sydney's Lower North Shore
A 1920 double-brick building, sixty per cent owner-occupied residence, the owners' own jewellery business at the front. Cover had lapsed. Six insurers declined. Placed in two days at around $6,000 against the only other quote of around $12,600.
THE SITUATION
The owners of a building on Sydney's Lower North Shore came to us about the building they live in. The front portion of the ground floor is their own jewellery business, which holds its own jeweller's block policy. The rest of the ground floor and the whole upper level is their home. The split is about 60 per cent residential and 40 per cent commercial, all under one roof.
The building dates from 1920, double brick with a Colorbond roof, concrete and timber floors downstairs and timber and tile upstairs. It isn't heritage-listed. It was rewired and replumbed in 1985 and the switchboards were replaced about four years ago. Smoke alarms, a fire extinguisher and deadlocks were in place. The owners wanted a building sum insured of $1.3 to $1.4 million and were happy to carry a $5,000 excess.
The previous building policy, arranged some time ago through a contact, had lapsed. They wanted the gap closed quickly and properly.
OUR APPROACH
Owner-occupied mixed-use with a retail business run by the owner is one of the configurations we place most easily, provided the building's services and the residential share are presented clearly.
- The two uses explained together: the submission set out that the residence was owner-occupied and the business was owner-operated, with the jeweller's block policy noted so the underwriter could see the business's own risks were insured elsewhere
- The services dated: 1985 rewiring and replumbing, recent switchboards and the absence of any heritage listing kept a 1920 building inside standard mixed-use appetite
- Confirmed by phone: before binding, we confirmed with the underwriter that owner-occupied residential above an owner-operated business was acceptable on their wording. It was.
THE CHALLENGES
Six insurers declined to provide a quote. Sixty per cent residential is over the line for most mainstream property insurers, and a 1920 building narrows the field further even when the services have been updated.
Two markets quoted: one at around $12,600 and the other at around $6,000. The lapse had to be disclosed. It didn't affect the terms.
After binding, the owners asked whether the residence's contents could be added. A mixed-use building policy doesn't cover the owner's household contents, so that was set up as a separate home contents policy for $80,000, with the jeweller's block left exactly where it was.
THE OUTCOME
We placed building cover at approximately $6,000 a year, two days after we first spoke, on wording that suits an owner-occupied building.
Less than half the only other quote, with the owners' home and their business under one building policy for the first time in a while, and the contents and the jeweller's block on their own policies alongside it.
This is the structure that works when you live above your own business: one building policy, a separate home contents policy, and the business's own cover kept separate. It's explained in full on living above your own business, and the wider picture is on our mixed-use property insurance page.
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