MIXED-USE PROPERTY CASE STUDY
Law Office at the Front, Residence at the Rear, Refinanced in Two Days, NSW South Coast
A refinance exposed that the building had no insurance at all. Five insurers declined. Four quotes ranged from around $2,400 to around $12,700 for the same building. Bound within two days with the lender noted.
THE SITUATION
The owner of a mixed-use building on the NSW South Coast came to us out of hours. He was refinancing, the lender had asked for a certificate of currency, and there was no policy to produce. The building had been uninsured.
He had owned it for about six years. The front section was leased to a law firm as office space. The rear section was a two-bedroom, one-bathroom residential tenancy. A wall separated the two with separate entrances, and there was a garage underneath. The split was about 60 per cent residential, 40 per cent commercial. Built in the 1980s with fibre-cement walls, timber floors and a metal roof, it had been rewired and replumbed in 2016, had no asbestos, and had smoke alarms, deadlocks and window locks. The building sum insured was $700,000.
OUR APPROACH
A professional office under a residence is one of the easier mixed-use configurations to place, and the 2016 rewiring and replumbing kept a 1980s building inside mainstream appetite. What was going to narrow the field was the residential share, so we went to the markets whose threshold it cleared.
- Everything in the first call: we spoke to the owner the next day and collected construction, dates, tenancy detail, fire protection, security and the lender's name in one conversation
- Markets in parallel: with a lender waiting, the submission went to every likely market at once rather than in sequence
- Interested party from the start: the lender was noted on the submission so the certificate could issue the moment cover was bound
THE CHALLENGES
Five insurers declined to provide a quote. The residence being the larger part of the building is where most mainstream property insurers stop. The four that did quote produced a spread that shows why comparing markets on a mixed-use building isn't optional: around $2,400, around $3,800 (after an internal referral), around $6,500 and around $12,700, all for the same building on the same information.
The building being uninsured wasn't a risk problem, but it was a disclosure the owner had to make and a gap he wanted closed immediately.
THE OUTCOME
We placed building cover at approximately $2,400 a year, the lowest of the four quotes by a wide margin and on wording appropriate for an office-and-residence building.
Cover was bound two days after the enquiry, with the lender noted as interested party, and the refinance proceeded. The most expensive quote for the same building was more than five times the premium placed.
If a lender is waiting on you, read cover before settlement or refinance for the eight details that made this one fast. The wider picture is on our mixed-use property insurance page.
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Tell us the date and the address. With the details ready, an office-and-residence building like this one can be bound in days.