Insurance Overcharge: Which Premiums Your Landlord Cannot Pass Through to You
If your landlord is passing through executive liability, terrorism, or environmental insurance premiums, you may be paying for specialty coverage that protects the landlord's business, not the building. These premium types can add $2,000 to $5,000 to a single year's insurance line.
Definition
An insurance overcharge occurs when a landlord includes insurance premium costs in a CAM reconciliation that are either prohibited by lease exclusions or unrelated to the standard property and liability coverage that tenants are obligated to share. Commercial leases typically permit pass-through of commercial general liability insurance and property insurance covering the building structure, but exclude specialty coverages, executive-level policies, and deductibles that represent the landlord's own risk retention. Specialty exclusions that appear frequently in overcharge disputes include earthquake and flood insurance, terrorism coverage, directors and officers liability, environmental liability, and umbrella policies above standard limits. CAMAudit's insurance overcharge detection rule uses AI classification to categorize each insurance line item and cross-references the identified coverage type against both the lease's insurance provisions and established norms for permissible pass-through coverage, flagging any premium type that lacks explicit lease authorization.
Not all insurance costs are pass-through eligible. Specialty, executive, and catastrophe insurance premiums that protect the landlord's interests rather than the building's operations are common unauthorized charges.
How we detect
- 1
CAMAudit uses AI classification to categorize each insurance line item in your CAM reconciliation. CAMAudit's insurance overcharge detection rule distinguishes between standard property and liability premiums, which are generally pass-through eligible, and specialty coverage types that are commonly excluded: earthquake, flood, terrorism, environmental liability, directors and officers, umbrella policies above standard limits, and loss-of-income insurance.
- 2
CAMAudit cross-references identified insurance types against your lease's specific insurance provisions and exclusion list. When a line item matches an excluded category or an insurance type with no lease authorization, CAMAudit flags it as a potential overcharge with the specific policy type noted alongside the dollar amount.
- 3
CAMAudit generates a finding report identifying each flagged insurance type, the dollar amount billed, and the lease provision that does or does not authorize it. When the lease's insurance language is ambiguous, CAMAudit notes that ambiguity so you can request the actual policy documentation and evaluate coverage scope against your specific lease terms.
Real-world example
A retail tenant's lease permitted pass-through of "commercial general liability and property insurance for the shopping center." The reconciliation included $11,900 in "insurance premiums" broken down into property insurance ($8,200), earthquake coverage ($2,300), and directors and officers liability ($1,400). CAMAudit classified the earthquake and D&O premiums as non-standard pass-through costs and flagged $3,700 as a potential overcharge.