Renting Commercial Space: The Insurance Your Lease Actually Requires
The insurance exhibit in a commercial lease is a contract you have to perform. Most tenants sign it and then buy something different.
- Match the limits in the exhibit exactly — not approximately
- Landlord as additional insured plus waiver of subrogation is standard
- Your leasehold improvements are yours to insure, not the landlord’s
- Triple net leases pass building insurance costs to you as well
- Provide the certificate before possession or the lease may be in default
Read the exhibit before you sign
The insurance exhibit specifies limits, required coverages, endorsement wording and evidence timing. It is negotiable before signing and binding afterwards, which is the wrong order for most tenants.
Three items are worth negotiating: broad-form indemnity language that would make you responsible for the landlord’s own negligence, limits far above what your operation warrants, and requirements for coverages that do not exist in your market.
The wording that costs money to get wrong
Additional insured status for the landlord is standard, and the exhibit often names a specific endorsement form. Waiver of subrogation prevents your insurer pursuing the landlord after paying a claim, and it must be endorsed onto the policy — a certificate box tick alone is not the coverage.
Primary and non-contributory wording appears in most institutional leases. It means your policy pays first without seeking contribution from the landlord’s. Each of these is an endorsement with a premium, so price them before you commit.
Who insures the build-out
If you paid for it, you insure it. Flooring, partitions, wiring, fixtures, signage — that investment sits under your business personal property limit, and it is routinely omitted because both parties assume the other has it.
Add the build-out cost to your contents limit the year you complete it, and again after any significant renovation.
Triple net and the costs behind rent
A triple net lease passes property taxes, building insurance and maintenance to the tenant on top of base rent. You are paying for the landlord’s building coverage without being insured by it — that policy covers the landlord’s interest, not yours.
Your own property and liability coverage is separate and still necessary, which surprises tenants who see an insurance line item in their operating expenses.
Business interruption is the tenant’s blind spot
If the building is damaged and you cannot operate, the landlord’s policy replaces the landlord’s rent. Nothing replaces your income unless you bought business interruption coverage.
Size it at twelve months of gross earnings less non-continuing expenses, and check whether the lease lets you terminate or abate rent during a rebuild — that changes the calculation.