Insurance: A Key Element in Lease Agreements

Insurance considerations are a vital part of lease discussions. It is important that a landlord engage their insurance broker in reviewing their lease. This means reviewing both the insurance that the landlord must carry and what they require of their tenant. This will have implications for any mortgage as well. A landlord needs to know what insurance coverage a lender will require to support their mortgage. All of this will need to be reflected in the lease. A landlord should regularly review and understand what insurance they need to carry based on the current insurance environment.

It is highly recommended that tenants take the lease insurance terms straight to their insurance carrier when the agreement is first received. They can then understand the cost implications of the requirements and find an insurance company that is in the business of providing commercial renters insurance. It is also critical to clarify what levels of insurance cost before negotiating. A level of liability insurance required by the lease may or may not be available at a reasonable cost.