Insurance that covers the building structure and landlord-owned improvements against damage from fire, storms, vandalism, and other covered perils. Property insurance premiums are a standard operating expense passed through to tenants in most commercial leases.
Commercial property insurance covers the building structure, permanently installed equipment (HVAC, elevators), and landlord-owned improvements at replacement cost or actual cash value. Standard policies cover named perils (fire, wind, hail, vandalism) while broader "all risk" policies cover everything except specifically excluded perils (flood, earthquake, acts of war). Tenants pay their proportionate share of the premium. The insured value, deductible, and coverage scope all affect the premium amount.
A landlord insures the building at $30M replacement cost when the actual replacement value is $20M. The inflated insured value produces a higher premium that is passed through to tenants. In the event of a claim, the landlord collects only actual damages, meaning the excess coverage provides no real benefit.
Request the property insurance declarations page and verify that the insured value is reasonable for the building. Compare the premium per square foot against benchmarks for similar properties. If the insured value seems high, ask for the appraisal or valuation that supports it.
Worried about property insurance in your lease?
Need to extract lease terms before your audit?
A CAM audit is only as accurate as your lease data. lextract.io extracts 126 structured fields from any commercial lease PDF: CAM definitions, pro-rata share, caps, base year, and audit rights. So you have the exact terms your landlord is supposed to follow.
Go to lextract.ioUpload two PDFs. 14 detection rules. Under 15 minutes. Free.
Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
