A mixed-use building refers to a blend of commercial and residential units situated on the ground floor and top floors of the same building, respectively. Like any other property, this type of property requires insurance for protection against property damage and liability cases. However, unlike pure commercial or residential properties whose insurance needs are somewhat clear, insuring mixed-use buildings requires additional considerations due to diversity in occupancy. Here are important facts to know about insuring mixed-use buildings.
Mixed-use properties face perils such as natural disasters, theft, vandalism, water damage, liabilities, and fire. While both commercial and residential sections of the properties face these problems, they do so in different measures. For instance, thanks to a large number of visitors, commercial spaces have a higher liability risk than residential units. Also, some businesses may pose a higher risk of property damage than others. For example, a laundromat increases the risk of water damage in a mixed-use building. Therefore, for proper insurance of your mixed-use building, you first need to assess the risks at hand, as this will help you determine the types as well as amounts of insurance required for adequate coverage.
Also read: Important factors that impact the cost of commercial property insurance
To avoid misunderstandings, ensure all parties involved, in this case, you and the commercial and residential tenants, meet their insurance obligations. For instance, you need the right landlord insurance coverage that will protect you from financial losses associated with any damage that occurs on the building structure or the common areas of your mixed-use property. You also need some liability insurance coverage to cover liability cases such as a visitor in your premises tripping on the stairs and breaking their arm. If you rent out furnished apartments or commercial spaces, you should also carry enough contents coverage to protect your belongings.
On the other hand, tenants are responsible for insuring their belongings and preventing damage in their respective spaces. However, compared to homeowners, renters generally underestimate the value of insuring their belongings. In fact, only about 40% of renters have the right renters' insurance coverage. On the business front, a whopping 40% of small business owners in the U.S. are uninsured. Keeping this in mind, make it a lease requirement for all your tenants to have adequate insurance coverage. To achieve this goal, ensure that:
Given different businesses face different risks, ensure your commercial tenants have specialized coverage depending on the types of businesses they run. They should also meet specific industry requirements as this may help reduce the risk in your property. For instance:
When it comes to mixed-use property insurance, you need to consider individual insurance needs for both commercial and residential units. Contact us at GrayStone Insurance Group if you have any questions about commercial insurance policies. We are happy to help protect your business assets with customized coverage.
