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What You Need To Know About Mixed-Use Building Insurance

Austin Landes, CIC
10 minute read

Mixed-use buildings are aptly named as they are properties that blend residential, commercial, industrial, entertainment, and even industrial functions into one space. The most common mixed-use buildings, and the most challenging to cover from an insurance perspective, are those that combine commercial (such as retail stores and offices) and residential (such as apartments and condos). Typically, the commercial area is on the bottom floor, while the residential space is on the upper floors.

While it’s incredibly practical to offer living, shopping, and employment options from a single footprint, this range of activities also brings a range of liabilities. If you’re looking to insure a mixed-use building, here’s what you need to know.

Challenges With Obtaining Mixed-Use Building Insurance

Everything in the insurance world is a calculation of risk. And for insurance providers, there are a lot of additional risk inputs that must be calculated when writing policies for mixed-use buildings. The biggest challenges you’ll face when insuring these properties include:

Residential Tenants

Renters of residential apartments are high-risk tenants. When people live in your structure, the risk of water damage and fire increases drastically, as well as liability claims from personal injuries (e.g. slip and fall), property damage, and even deaths due to carbon monoxide or lead paint poisoning. For that reason, it’s equally challenging to obtain apartment building insurance for residential properties that aren’t mixed use.

Apartment renters add significantly more risk than people who simply work in an all-commercial building, like an office complex, and type on a computer from 8am to 5pm.


Many mixed-use buildings have a restaurant on the lower floor and cooking in an industrial kitchen carries a high risk of fire. Additionally, the amount of foot traffic coming in and out of restaurants leads to additional liabilities arising from injuries on your premises, vandalism, and property damage.

Insurance Market Trends

Many insurance companies are non-renewing mixed-use buildings and their customers are forced to find coverage with specialty insurance companies. These specialty companies typically have more expensive policies, but are usually more stable and include the necessary coverages a mixed-use building owner should have.

Essential Coverages For Mixed-Use Building Insurance

Your policy needs to be tailored for the specific types of uses your property is supporting, but most mixed-use building insurance should include these coverages:

Building Insurance

Commercial building insurance typically covers the physical structure itself against damage from insured events, like fire, storm, vandalism, and other risks. It can also cover permanent fixtures and fittings, like built-in cabinetry, plumbing, and heating systems.

In the context of mixed-use buildings, where residential spaces coexist with commercial entities like shops or restaurants, building insurance is essential. It ensures that in the event of a claim—such as a fire that starts in a restaurant’s kitchen and spreads to the residential areas above—the repair or rebuilding costs of the entire structure are covered. Without mixed-use building insurance, the property owner could face significant financial losses, potentially jeopardizing the viability of both the residential and commercial aspects of the property.

Ordinance & Law Coverage

This insurance provides financial compensation to fix a building, after it has been damaged or destroyed, in a manner that complies with the most up-to-date building codes and laws. This means you’ll be covered for the increased costs of construction, demolition, and removal of debris that can occur if local ordinances have changed since the building was first constructed.

Mixed-use buildings, especially those with historical significance or built many decades ago, may not be up to current building codes. If a covered loss occurs, ordinance and law helps cover the gap between the original state of the building and the new standards required by current laws, which can be particularly stringent for buildings that have both commercial and residential units.

Business Income / Loss of Rents

When a property cannot be used due to a covered peril, and therefore the owner cannot collect rent or operate their business to generate revenue, business income or loss of rents covers the loss of income. This ensures the property owner stays financially afloat, and can pay bills and maintain cash flow, until the property is repaired.

This type of coverage is an essential element of mixed-use building insurance as it provides financial stability if, for example, a critical repair or a major claim forces businesses to close or tenants to move out temporarily. The owner will be protected from repair costs and lost rental income for both commercial and residential spaces.

General Liability

General liability insurance protects against claims of bodily injury or property damage for which the building owner could be held responsible. This can include slips and falls, damage to tenant property, and more.

In mixed-use buildings, there's higher foot traffic to the commercial businesses, which increases the potential for accidents. For instance, if a customer visiting a coffee shop on the ground floor slips and gets injured, general liability insurance can cover medical expenses and legal costs, protecting the building owner from out-of-pocket expenses.

Assault & Battery

Assault and battery coverage is designed to protect the building owner from claims arising from fights or assaults that happen on the property. Standard general liability policies often exclude these incidents, making this coverage an important addition.

The diverse range of social and commercial interactions in mixed-use buildings heightens the risk of incidents that could lead to assault and battery claims. For example, if a fight breaks out in a bar located in your building and leads to an injury, this coverage would help address the legal and medical costs associated with the claim.

Strategies For Lowering Premiums On Mixed-Use Building Insurance

There’s no secret password that can get you great coverage at a rock-bottom price, but there are certain strategies you can put in play to make your mixed-use building insurance more affordable:

Opt for higher deductibles

A deductible is the amount a policyholder must pay out-of-pocket before the insurance coverage kicks in. Choosing a higher deductible usually means lower insurance premiums because it reduces the number of small claims the insurer is expected to pay, which is seen as a reduction in risk.

Buildings with apartments frequently have small claims, so underwriters love high deductibles on these properties. However, mixed-use building owners must balance the financial cost of this ploy—consider what you’d save on the premiums versus the potential cost of having to meet a higher deductible if damage or a claim occurs.

Install fire suppression systems for restaurants

Fire suppression systems are designed to quickly control and extinguish fires. Having an advanced system can reduce the chance of extensive damage to a building, leading to lower insurance premiums because the property is considered to be a better risk.

In mixed-use buildings, a kitchen fire in a restaurant can quickly spread to other commercial spaces and residential units above, risking lives and property. By ensuring that restaurant tenants have state-of-the-art fire suppression systems, the property owner not only enhances safety for all tenants but may also benefit from lower mixed-use building insurance costs.

Require renters insurance for tenants

Renters insurance covers tenants' personal property and can provide liability protection. When tenants have their own insurance, it reduces the potential for claims against the building owner's policy.

In mixed-use properties, the close proximity of commercial and residential tenants increases the likelihood of incidents that could affect both. By requiring renters insurance, the property owner transfers some risk to the tenants' policies, which can protect the owner from claims, such as when a commercial tenant’s customer damages a residential tenant's property.

Seek quotes from specialty underwriters

There are underwriters and insurance companies that specialize in covering residential and commercial structures, offering policies tailored to the unique needs of properties like mixed-use buildings. These companies may provide more customized coverage options and potentially more competitive pricing due to their focus on specific property types.

Get a quote on mixed-use building insurance.

LandesBlosch has decades of experience insuring mixed-use buildings of all sizes. From smaller buildings that need a simple cost-effective solution to large developments that need to build out a complex, layered solution, we can create a policy that suits both. Get started by calling our commercial property team at 918-221-6635 or getting a quick quote online. Quotes on smaller and less complex properties can be turned around in the same day.

Austin Landes, CIC

About The Author: Austin Landes, CIC

Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.

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