5 Key Commercial Lease Terms: #4 Be Sure to Consider Insurance

The 5 Key Commercial Lease Terms for Restaurants:

Get “On the Same Page” As Your Landlord, Figuratively and Literally

Be Sure to Consider Insurance

Finding and leasing commercial space has a different set of rules than for residential rental properties.  One golden rule, however, remains true in both cases: thou know and understand the key lease terms and ensure the lease agreement is specific and clear.  In this series, we will analyze five key terms of a commercial lease relationship.  This is the fifth part of a six-part series, examining five key terms in your commercial lease agreement.  Today, we’ll discuss insurance coverage.

Before a tenant signs a lease agreement, the tenant should be aware of the landlord’s demands for insurance coverage and seek to qualify for such insurance.  Many landlords will require insurance to protect the landlord from the tenants’ negligent and willful acts, but the landlord may have other insurance needs, which, to an unsuspecting tenant, may significantly increase the tenants’ operational overhead.

Here are some questions to ask the landlord before you sign your lease agreement?

  • What are your insurance requirements?
  • What is the penalty for failing to meet these requirements?
  • If a special insurance coverage is required, why is it needed?
  • Is Common Area Maintenance adjusted to account for my obligation to carry this insurance?
  • What insurance do you (the landlord) carry on the building/ premises?
  • (And, perhaps most importantly) where in the lease agreement are these requirements and penalties recorded?

Be sure to consider insurance coverage and ensure that your lease agreement accurately reflects your understanding and agreement with your landlord, so your lease agreement insures your landlord’s assurances.

(See what I did there?)

Finally, we next discuss some general considerations.


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