What Insurance Should Commercial Landlords Require From Tenants?

A commercial landlord should require each tenant to carry commercial general liability, usually at $1 million per occurrence and $2 million aggregate, name the landlord and its property manager and lender as additional insured, and provide a waiver of subrogation. Higher-risk tenants and larger spaces often call for umbrella limits, property coverage on the tenant's own contents and improvements, business interruption, and workers compensation. The lease sets the requirement, but the protection only holds if the tenant's certificate is collected, verified, and confirmed to stay current for the whole term.

Most lease disputes over insurance do not happen at signing. They happen three years later, when a slip-and-fall claim lands and the landlord discovers the tenant's policy lapsed, dropped the additional insured endorsement, or never carried the limit the lease required. This guide covers what a commercial landlord should require, why each piece matters, and how to keep the coverage verified across a portfolio instead of collecting one certificate and forgetting it.

What insurance should a commercial lease require from a tenant?

A commercial lease should require commercial general liability covering the tenant's operations in the leased premises, typically $1 million per occurrence and $2 million in the general aggregate, with the landlord named as additional insured. Most leases also require the tenant to carry property insurance on its own improvements and contents, workers compensation where the tenant has employees, and an umbrella policy that raises the effective liability limit for tenants whose use carries more risk. The exact coverages should match the tenant's use, the size of the space, and the value of the building.

The key is to write the requirement to the actual risk. A quiet professional-services office and a restaurant with a commercial kitchen and liquor service do not belong on the same insurance clause. Tying the requirement to the use is what keeps a high-hazard tenant from carrying a low-hazard limit.

How much liability insurance should a landlord require?

A common baseline is $1 million per occurrence and $2 million aggregate of commercial general liability, raised with an umbrella to $2 million, $5 million or more for larger spaces, higher foot traffic, or higher-hazard uses. Retail, food service, fitness, medical and entertainment tenants usually warrant higher limits than a small office. Lenders and the building's own insurance program may also dictate minimums the lease has to meet.

Whatever the figure, it should be stated as a floor in the lease and verified against the certificate, not assumed. A lease that requires $2 million but accepts a certificate showing $1 million has quietly given up half the protection it bargained for.

Why must a tenant name the landlord as additional insured?

A tenant should name the landlord as additional insured because being listed as certificate holder alone gives the landlord no coverage. Additional insured status, added by endorsement, extends the tenant's liability policy to defend and cover the landlord when a claim arises out of the tenant's use of the premises. Without it, the landlord is left relying only on its own policy when a customer is injured in the tenant's space.

This is the single most common gap in tenant insurance. The certificate lists the landlord in the certificate holder box, everyone assumes coverage is in place, and no one confirms the additional insured endorsement actually exists. The distinction matters enough that it is worth understanding in full, which our explainer on additional insured versus certificate holder walks through.

What is a waiver of subrogation and why require it?

A waiver of subrogation stops the tenant's insurer from suing the landlord to recover money it paid on a claim. Commercial leases commonly require mutual waivers so that, after a covered loss, each party's own insurer absorbs the loss rather than chasing the other party. It supports the risk allocation the lease already set and prevents an insurer from undoing it after the fact.

Like additional insured status, a waiver of subrogation is added by endorsement and should be confirmed on the certificate or the policy, not assumed because the lease asked for it.

Should the landlord require property and business interruption coverage?

Yes, in most cases. The landlord insures the building shell, but the tenant should insure its own improvements, betterments and contents, because those are the tenant's property and the landlord's policy generally will not rebuild a tenant's buildout. Business interruption coverage protects the tenant's income if the space becomes unusable, which also protects the landlord indirectly by keeping the tenant solvent enough to keep paying rent. For tenants making significant improvements, the lease should be explicit about who insures the buildout and at what value.

How do landlords verify tenant certificates of insurance?

Landlords verify tenant certificates by recording each lease's insurance requirement, collecting the certificate at signing, and then checking it against that requirement: the right coverages, the required limits, the landlord named as additional insured, and a waiver of subrogation where the lease calls for one. The verification has to repeat at every renewal, because the certificate collected at signing only proves coverage on the day it was issued.

Reading a certificate correctly is the same discipline behind certificate of insurance verification generally: confirm the coverage the lease requires is actually in force, on the correct form, at the correct limit, naming the correct ownership entity, and current. For a portfolio with each building in its own entity, confirming the certificate names the right entity is part of the check, not an afterthought.

How do landlords keep tenant coverage current for the whole term?

The hard part is not the first certificate. It is the renewal that arrives a year later, the policy that cancels mid-term, and the endorsement that quietly drops off. Keeping coverage current means tracking every tenant's expiration date, chasing the renewal certificate before the old one lapses, and re-verifying that the limits and endorsements still meet the lease. Across more than a handful of tenants, doing that by hand on a spreadsheet is where coverage falls out of compliance without anyone noticing.

This is where COI tracking for commercial real estate earns its place. It reads every tenant, contractor and vendor certificate, checks each against the requirement for that lease or contract, confirms the right entity and lender are named, and flags anything short, expired or missing, so an asset-management team is not reconciling PDFs against leases by hand. Day-to-day building vendors are tracked the same way as COI tracking for property management, and pulling every certificate into one place is what certificate of insurance management software is built to do.

The bottom line

A commercial landlord should require general liability at a limit that matches the tenant's use, additional insured status for the landlord and its lender, a waiver of subrogation, and property and business interruption coverage on the tenant's own assets. Then it should verify all of it at signing and at every renewal. Writing a strong insurance clause is only half the job; the protection is real only when the certificate is checked and kept current for the life of the lease.

Verifying insurance is one step in a larger leasing workflow. Many owners send the lease out for signature with an online tool like document e-signing software, pull the insurance, indemnity and renewal terms out of long leases with AI lease abstraction software, and manage building and capital-project spend through purchase order management software. Keeping insurance verification automated keeps it from being the gap a claim finds first.