What Does Mixed-Use Property Insurance Cover?

A standard mixed-use property insurance policy is designed to cover one building with both commercial and residential tenants under a single schedule. It combines what would otherwise be a commercial property policy (for the retail, office or cafe tenant) with what would otherwise be a landlord or residential block policy (for the apartments above).

The cover is broader than either on its own, because it has to handle incidents that cross the boundary between the two sides - a fire downstairs damaging apartments above, a water leak from upstairs flooding the retail below, a visitor injured in a shared stairwell.

The summary below is based on standard Australian mixed-use wordings from specialist underwriting agencies. Every policy is different - read the PDS and policy schedule before relying on any specific item.

What a standard mixed-use policy includes:

• Building cover - the structure itself, external walls, roof, floors, shared areas, permanent fixtures
• Public liability - typically $10M or $20M, covering third-party injury and property damage in parts of the building you're responsible for
• Loss of rent - replacement income if tenancies become uninhabitable after an insured event (typically 12-24 months)
• Owner's contents and fit-out - any contents, equipment or fit-out you own (not the tenant's)
• Debris removal and professional fees - typically included up to a sub-limit

This is a general summary and not a substitute for reading your policy schedule and PDS. Cover varies between insurers. Tank Insurance is not a tax or legal adviser - confirm specific cover implications with your broker or advisers before relying on them.

Coverages that appear in virtually every mainstream mixed-use wording we place:

Commonly available but depends on how your policy is structured, the tenancy mix, and specific sub-limits or extensions:

Exclusions that apply to most mainstream mixed-use wordings. Know them before you need to claim:

These are real claim scenarios we see on mixed-use properties. Each shows how the policy typically responds - useful for understanding where cover starts and stops in practice.

These scenarios reflect standard mixed-use wording responses. Individual policy terms vary and should be checked at the schedule level.

Scenario 1 - Ground floor cafe fire spreads to apartments above

A cooking fire in the cafe's commercial kitchen spreads, damaging the cafe's fit-out and the structural floor above, with smoke damage to the residential apartments. A standard mixed-use policy typically responds as follows:

• Building structural damage - typically covered up to the sum insured (subject to policy terms)
• Smoke damage to the structure of the apartments - typically covered
• Cafe's fit-out and equipment - not covered under the building policy (cafe tenant's own business insurance applies)
• Apartment tenants' contents - not covered under the building policy (tenant's own renter's insurance applies)
• Loss of rent on apartments and cafe while building is repaired - typically covered
• Public liability if an apartment tenant was injured escaping the smoke - typically covered, subject to the policy PL section

Scenario 2 - Burst pipe in upstairs apartment floods retail below

A plumbing failure in an upstairs apartment causes water to flood the retail tenancy below. Typical mixed-use policy response:

• Building structural damage (damaged ceiling, walls, floors) - typically covered
• Retail tenant's stock and equipment - not covered under the building policy (tenant's own contents / BI policy)
• Retail tenant's loss of income - not covered under the owner's policy (tenant's own BI, or a claim against the owner if negligence is proven)
• Owner's loss of rent while retail is unusable - typically covered
• If the retail tenant sues the owner for inadequate plumbing maintenance, public liability may respond - depends on the specifics of the claim and the policy

Scenario 3 - Visitor slips on wet floor in shared entry

A customer of the ground-floor cafe slips on wet tiles in the shared entry to the building. They sue for injury. Typical policy response:

• The shared entry is owner-controlled, so the owner's public liability section typically responds
• Covers legal defence costs and any damages payable, subject to the policy PL limit
• If the slip happened inside the cafe itself, the cafe's own PL would typically apply instead
• Most mixed-use policies carry a $10M or $20M PL limit which is usually sufficient for typical slip-and-fall claims, but every claim is assessed on its facts

Scenario 4 - Storm damages shopfront glass and signage

A severe storm shatters the shopfront glass, damages the illuminated signage and causes water ingress into the commercial tenancy. Typical policy response:

• Building structural damage (roof, walls) - typically covered under storm
• Shopfront glass - typically covered up to the glass sub-limit (check your schedule)
• Signage - typically covered up to the signage sub-limit (often separate from glass)
• Water damage to the structure - typically covered under storm
• Water damage to the tenant's stock - tenant's own policy, not the building policy
• Owner's loss of rent during repair period - typically covered

These scenario responses are general illustrations based on standard market wordings. Your specific policy schedule and PDS will determine how a real claim is handled.