Captive Insurance for Mixed-Use Properties: How the Cell Structure Works

Mixed-use properties put apartments, shops, offices and parking in one development. Each use has its own risk and its own insurance market. That is exactly why the cell structure is a natural fit for captive insurance for mixed-use properties.

The mixed-use insurance stack

A typical development with apartments over ground-floor retail and a shared garage carries several lines:

• Residential property and liability for the units, residential common areas and the owner’s liability to residents

• Commercial property for the retail space, commercial common areas and the garage

• Commercial general liability for the owner as landlord of commercial space

• Workers’ compensation for the management and maintenance team

• Umbrella over the residential and commercial liability

In a traditional program, these are often placed with different carriers, and what isn’t spent on claims on each line goes to each carrier.

What a cell structure is

A cell structure is one insurance company divided into separate cells. Each cell has its own premium, claims and results. In domiciles that allow protected cells, each cell’s assets and liabilities are legally separated from the others. The cells share the company’s administration, compliance, claims handling and reinsurance.

How cells fit mixed-use

Residential

The residential side has the most predictable, highest-volume premium: the apartments, the residential common areas and the resident liability program. It is usually the easiest place to start. Our programs have consistently averaged 75% to 93% resident enrollment over time.

Commercial

Retail and office risk varies more by tenant. A restaurant is a different liability exposure than a dentist’s office. Keeping commercial risk in its own place means a bad year in one use doesn’t hide a good year in the other.

Operator

Your management team’s workers’ compensation and professional lines can sit in their own layer as well.

Don’t forget tenant insurance

Commercial tenants carry their own policies. Your leases should require proof of coverage and name you as an additional insured where appropriate. That coverage doesn’t become part of your captive, but it shifts tenant-caused losses to the tenant’s insurer, which protects your results.

Adding a cell to what you already have

You don’t have to move everything at once. Many owners start with the residential layer and add the owner and operator layers later. Our guide on adding an insurance cell to an existing structure covers the steps.

Where Insur3Tech fits

Insur3Tech’s captive uses a cell structure for residents, owners and operators. There is no minimum premium and no unit minimum; portfolios as small as 4 doors can join. There are no holdout periods. The entire program is reinsured, so you carry no downside risk. What isn’t spent on claims comes back to you.

To see how this compares with other structures, read our captive vs. RRG comparison, which also covers traditional policies.

Want to map your mixed-use property? Book a free discovery call. We’ll audit your portfolio for free and tell you how much you can expect to get back every year.