The insurance section of a commercial lease is easy to skim and expensive to ignore. By signing, you're not just renting space — you're contractually promising to carry specific coverage, at specific limits, protecting your landlord. Fall short and you're in default; get it wrong and a loss can land on you personally. Here's what a typical lease actually requires and how to comply without overbuying.
What insurance does a commercial lease require?
Requirements vary, but a standard commercial lease asks the tenant for most of this:
- Commercial General Liability (GL) — usually $1 million per occurrence / $2 million aggregate, covering third-party injury and property damage arising from your use of the space.
- Property coverage on your business personal property (inventory, equipment, furniture) and your tenant improvements and betterments — the build-out you added. The landlord insures the building shell; you insure what's inside and what you improved.
- Workers' compensation if you have employees (see do you need workers' compensation insurance).
- Business interruption / extra expense — increasingly required so you can keep paying rent if the space is unusable after a loss (see business interruption insurance).
- Commercial auto if the business uses vehicles.
- Sometimes umbrella/excess liability for higher limits, and in some leases liquor liability, cyber, or professional liability depending on the tenant's operations.
A business owners policy (BOP) often bundles the GL and property pieces efficiently for a smaller tenant.
The endorsements your lease almost certainly requires
Coverage alone isn't what the landlord wants — they want *your* policy to protect *them*. That means the same risk-transfer endorsements that show up in construction contracts:
- Additional insured — the landlord (and often the property manager and lender). For a lease, this is the Managers or Lessors of Premises endorsement (CG 20 11), which adds the landlord as an insured for liability arising from your use of the premises. It's a specific form — don't let it be done with the wrong additional-insured endorsement (see the types of additional insured endorsements).
- Waiver of subrogation in the landlord's favor, so your insurer can't recover from them after paying a claim (see waiver of subrogation).
- Primary and non-contributory coverage, so your policy pays first (see primary and non-contributory).
Crucially, a certificate of insurance does not add the landlord or prove these endorsements — only the actual endorsements on the policy do. If your lease requires additional insured status, confirm the endorsement is attached, not just typed onto a certificate (see certificate of insurance vs. additional insured).
Who insures what — tenant vs. landlord
A common point of confusion:
- The landlord insures the building/structure and carries their own liability for common areas.
- The tenant insures their own business personal property, their tenant improvements and betterments, their liability for their operations, and their lost income (business interruption).
Leases also usually include mutual waivers of subrogation, so neither party's insurer sues the other after a covered loss — which is why the waiver endorsement matters on both sides.
What happens if you don't comply?
Not meeting the insurance requirements puts you in default of the lease. Depending on the terms, the landlord may:
- Buy coverage on your behalf and bill you — often at a markup — through a "force-placed" provision,
- Charge penalties or late fees, or
- In a serious or ongoing case, treat it as grounds to terminate the lease.
And beyond the lease consequences, underinsurance leaves you exposed for whatever your policy doesn't cover when a real claim hits.
How to get it right before you sign
1. Read the insurance section before signing — the required coverages, the exact limits, and the additional insured / waiver / primary language. 2. Match your policy to it — right coverages, right limits, and the correct endorsements (especially CG 20 11 for the landlord). 3. Confirm the endorsements are attached, then provide a certificate that reflects them. 4. Don't overbuy either — a well-read lease lets you carry exactly what's required, no more. This is the same contract-and-coverage alignment as contractual liability.
Our approach
At Cory Washington & Co., we read the insurance exhibit of your lease before you sign and build a program that satisfies it precisely — the right liability and property limits, business interruption so you can keep paying rent after a loss, and the landlord (and manager and lender) added correctly with the managers/lessors endorsement, waiver of subrogation, and primary and non-contributory coverage. No default letters, no scramble when the landlord's attorney reviews your certificate. See our commercial property insurance and general liability insurance overviews for more.
Signing or renewing a commercial lease? Request a quote or a policy review and we'll match your coverage to the lease.
Frequently Asked
What insurance does a commercial lease usually require?
A typical commercial lease requires the tenant to carry commercial general liability (often $1 million per occurrence / $2 million aggregate), property coverage on the tenant's own business personal property and improvements, workers' compensation if the tenant has employees, and sometimes business interruption and commercial auto. The lease also usually requires the tenant to name the landlord (and often the property manager and lender) as an additional insured and to waive subrogation against them.
What does it mean to name my landlord as additional insured?
It means extending your liability policy to cover the landlord as an insured for claims arising from your use of the leased space. On a standard policy this is done with the Managers or Lessors of Premises endorsement (CG 20 11). A certificate of insurance alone does not add the landlord — only the endorsement does — so if your lease requires additional insured status, confirm the endorsement is actually attached, not just listed on a certificate.
What happens if I don't meet my lease's insurance requirements?
You're in default of the lease, which can give the landlord the right to buy coverage and bill you for it (often at a markup), charge penalties, or in a serious case terminate the lease. More dangerously, if you're underinsured and a major claim hits, you can be personally or financially exposed for amounts your policy doesn't cover. It's worth matching your coverage to the lease before you sign, not after a dispute.
This article is general information for business owners, not insurance or legal advice, and does not bind or alter coverage. Policy terms, eligibility, and pricing vary by carrier and state — confirm specifics with our licensed team before making decisions.