Insurance (passed through) refers to building insurance premiums for a commercial property that are billed to tenants as a pro-rata pass-through cost under a triple net lease or similar structure. This covers the landlord's property insurance on the building itself, and is distinct from the tenant's own separately required general liability and contents insurance.
Landlord's building insurance vs tenant's own coverage
| Coverage type | Who typically carries it |
|---|---|
| Building/property insurance | Landlord, passed through to tenant |
| General liability insurance | Tenant, separately required |
| Contents/inventory insurance | Tenant, separately required |
| Business interruption insurance | Tenant, optional but often recommended |
What to watch for before committing
Coverage scope confirmation
Confirm exactly what the passed-through insurance premium covers, since it's typically limited to the building structure, not your contents or liability.
Your own required coverage minimums
Verify what liability and other insurance coverage your lease requires you to separately carry and maintain.
Premium increase drivers
Understand what factors could increase the passed-through insurance premium, such as claims history or market-wide rate increases.
Certificate of insurance requirements
Confirm the process and timeline for providing your own certificate of insurance to the landlord.
Named additional insured requirements
Check whether your policy needs to name the landlord as an additional insured party.
Business interruption coverage consideration
Evaluate whether business interruption insurance makes sense for your operation, since it's typically not covered by the landlord's passed-through building insurance.
When you need to know this
- Evaluating a NNN lease — understanding what insurance costs are passed through versus your own separate requirements
- Setting up your business insurance program — confirming what coverage you need to independently carry
- Budgeting occupancy cost — estimating the full insurance-related cost of your lease
- Negotiating lease insurance provisions — clarifying coverage requirements and certificate processes before signing
Frequently asked questions
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