Risk snapshot
A multi-tenanted commercial and accommodation property. Building declared at a multi-million dollar replacement cost. The building operates as an income-producing asset with a mix of food and beverage tenancies alongside an accommodation component.
Situation
The property sits in a regional NSW area that had been materially re-rated by the insurance market following recent major flood events. The client needed a cover structure that could carry full flood protection, protect the income stream, and respond to prevention of access triggers where damage to surrounding property or utility interruption could close the building to its tenants and guests.
Construction and exposure
Older multi-storey build, traditional brick construction, tiled roof, concrete floors. Commercial cooking exposures across the food tenancies with the associated grease, gas, and out-of-hours fire load. Known flood exposure driven by the broader catchment, not the building itself. A risk improvements report was required as part of the submission before the market would engage.
Cover placed
An Industrial Special Risks policy on an ISR Mark IV wording, with a 12 month indemnity period on the income protection side. Negotiated sub-limits included flood cover on both an any-one-event basis and in the aggregate, prevention of access on a negotiated indemnity period and radius, remote premises of public utilities, accidental damage, and a layered extra cost of reinstatement.
Market journey
Several insurers were approached. Most declined. Decline reasons included location inside a rated flood catchment, aggregate flood exposure, food tenancy mix, and post-claim appetite in the region. The placement went to a specialist ISR underwriter after the risk improvements report and supporting schedules were lodged.
Outcome
Cover bound at a first-instance annual premium in the high $70,000s.
A couple of months after inception, the underwriter commissioned an independent valuation of the building as a second-opinion check on the declared values. The original sums insured had been prepared using figures the client had been given by other professional advisers and, on that basis, accepted at bind. The valuation came back with a higher replacement cost, which meant the initial schedule was sitting below the right declared value for an asset of this scale.
We worked with the underwriter to endorse the cover upward to match the valuation outcome before the gap ever had to be tested at a claim. The endorsement carried an additional premium of around $55,000. The client was comfortable with the adjustment because it put the programme on the right footing. The underwriter was comfortable because they had independent verification. The broker outcome was the one that matters on a building this size: the right sums insured on the right wording, before any underinsurance question arose.
Why it mattered
Multiple food tenants on one declared value schedule, a negotiated flood aggregate, and prevention of access extended beyond the standard default are structural to this building working as an income-producing asset. A business pack does not respond to this shape of risk. Without a negotiated ISR wording, the site was effectively uninsurable at scale, and any cover offered would have sub-limited the flood and prevention of access extensions to a point where they stopped being useful.