Mixed Use Property Insurance: A Clear & Simple Guide for 2023

Laura Olson
Dec 23, 2023

Mixed use property can be complicated for a building owner to insure. Each type of business conducted on the property - retail, office, or residential - has different insurance needs. 

As a result, landlords must ensure they are properly covered by working with an experienced insurance broker who understands the unique risks associated with mixed use property.

So do you need mixed use property insurance? The answer is maybe. It depends on how your property is classified and what type of coverage you need. 

This blog post will break down everything you need to know about mixed use property insurance so that you can make the best decision for your business. 

Mixed Use Insurance vs. Residential Coverage and Commercial Property Insurance: What's The Difference?

As a real estate investor or landlord, it's important to know the difference between residential coverage, commercial property insurance, and mixed use insurance. Though all of these policies cover physical damage to your property, there are some key distinctions that you should be aware of.

Residential Property Insurance

Residential property insurance is designed for homes used solely for living purposes. This type of policy typically covers loss of use, dwelling protection, personal belongings, liability, and medical payments. 

If you have a residential rental property, it's important to ensure that your policy covers all the risks associated with being a landlord. Things like damage to your property from tenants, liability if a tenant is injured on your property, and even theft can all be costly problems if you're not adequately protected.

Commercial Property Insurance

As a landlord of a commercial property, one of your biggest concerns is facing a lawsuit from either a tenant or the general public. A lawsuit can arise from slips and falls on the property, damage to the property or personal belongings, or even potential discrimination claims. 

In addition, you may also face financial loss due to business interruptions or damage to the property. Commercial property insurance can protect against these risks, offering coverage for both liability and physical damage to the property.

Mixed Use Property Insurance

Mixed use property insurance is designed for buildings that are used for both commercial and residential purposes. This type of policy typically covers loss of income, business interruption, theft, property damage, and liability. If you have a mixed use building, it's important to ensure that your insurance policy covers both the residential and commercial aspects of your business.

Landlord insurance for a commercial or mixed use property is typically more complex than landlord insurance for a residential rental property. This is because these properties are usually larger and have more complex structures than residential properties. 

Buildings with mixed residential and commercial use also tend to have more people coming and going, increasing the risk of damage or theft. As a result, landlords of properties with both residential and commercial components need to be more diligent in protecting their investment.

What Does Mixed Use Property Insurance Cover?

You're likely to face several types of risks when renting out mixed use property. These dangers might include property damage, legal issues, theft, and loss of rental income. Most insurance policies will cover common problems like these:

  • Property damage - property coverage protects you against the financial loss of damages to the property's structures against perils like fire, smoke, and falling objects, among others. It will also cover property contents, like equipment and furniture used to run your business.
  • Loss of use - if your tenants have to move out when the property is unlivable due to a covered event, your insurer compensates you for the rent you would otherwise collect if the tenants were still occupants.
  • General liability - claims or lawsuits from tenants and injured parties could result in thousands of dollars of legal costs, medical bills, and other damages.

It's important to remember that you're not simply a landlord; your mixed use property is an entire business. Therefore, it may require more than the basics above. Other events to have insurance for include:

  • Flood insurance - like many insurance policies, mixed-use coverage excludes flood insurance. This coverage is necessary if your property is in a flood zone.
  • Sewer or water backup - this is when sewer water from drains and toilets is pushed back up to your property. With so many tenants, the chances of sewer backup are even higher. Sewer backup will cover the cost of sewer removal and replacement costs for the damaged main line and your property.
  • Workers' compensation - mixed use properties require a lot of maintenance, leading to the employment of individuals that help manage, like janitors. This coverage covers your employees if they are injured on the job. 
  • Ordinance or law - this covers the costs of updating the property to current building codes.
  • Umbrella policy - the high traffic associated with mixed use properties exposes you to more liability cases. There needs to be more than a standard liability policy. Your umbrella policy kicks in and covers additional liability damages.

Since mixed use building insurance is never one size fits all, it is crucial to understand who occupies your properties and the risks you face. By doing this and working with a professional insurance broker, you can be sure that your policy will be personalized to fit your needs.

How Much Does Insurance for Mixed Use Property Cost?

When determining the cost of landlord insurance for mixed-use property, a few key factors come into play. The first is the location of the property. Areas with higher crime rates or natural disaster risk typically result in higher premiums (if you’re curious to see if your property is in an area with any natural hazards, use Obie’s Risk Map here).

The size and value of the property also play a role, as well as the types of tenants and their related industries. For example, a mixed use property with retail stores and residential units may have lower premiums than one with residences and both retail stores and a restaurant or bar.

Additionally, the level of coverage and deductible selected can affect the overall cost of insurance for a mixed use property. Finally, the age and condition of the building can affect premiums and coverage options.

As you consider landlord insurance for your mixed use property, it's important to keep these factors in mind and work with an insurance provider who can tailor a policy to meet your specific needs.

Where To Find Mixed Use Property Insurance

As a landlord, you have a few options for finding insurance for your mixed use property. You can work with an insurance agent, purchase a policy directly from an insurance company, or use an online insurance broker like Obie.

There are a few things to consider when choosing the right option for your mixed use property insurance. First, you must ensure you're getting the coverage you need. Second, you need to find an affordable policy (on average, landlords are saving 25% on insurance with Obie). And third, you need to find a provider that is easy to work with.

An online insurance broker like Obie can help you check these boxes. When you use Obie, you'll be able to get the coverage you need for your mixed use property at a price that fits your budget. And because Obie uses technology to streamline the insurance buying process, you'll be able to get your policy in place quickly and easily.

To get started, visit Obie today and enter your property to get an instant quote.