Insurance allocation in mixed-use buildings
Large mixed-use building complexes often share the same building insurance despite having different strata schemes and Owners’ Corporations (OCs). For example, when the lower part of the building contains commercial and retail tenancies and there is a residential tower on top.
The insurance premium is often split equally, leading to questions and even legal cases regarding the fairness of the distribution of the premium cost. Actuaries allocate premiums based on standard risk assessments, but these are often overly conservative and lack building-specific analysis. Lack of fire safely knowledge and taking risk rankings from internal databases do not accurately reflect real conditions.
On one hand, a restaurant is listed as a higher fire risk than an apartment due to the likelihood of cooking fires. On the other hand, a restaurant may have specialised kitchen fire suppression systems installed, equipment maintenance and staff training requirements, all of which are non-existent in an apartment.
When it comes to disputes about insurance premium allocations, it is advisable to commission a building risk assessment from a qualified professional.
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