Insurance Overcharges in CAM Statements: How Premium Pass-Throughs Go Wrong
Insurance is listed as an uncontrollable expense in most NNN leases, which means it sits outside the CAM cap. That exemption exists for a good reason: commercial property insurance premiums are driven by the market, not the landlord's decisions. But "uncontrollable" does not mean "unreviewed." Insurance allocations in CAM pools can overcharge tenants in at least three distinct ways: the amount allocated exceeds what was actually paid, the coverage types included are ones the lease does not permit, or the landlord passed on premium increases without crediting applicable discounts.
Request the insurance certificate and actual premium invoice for every coverage year in your reconciliation. Compare the billed amount to documented premium paid and check that every coverage type matches what your lease authorizes. Unauthorized types include D&O insurance, business interruption, and entity-level umbrella policies.
The insurance market context matters here. Commercial property premiums increased dramatically in 2023, the Council of Insurance Agents and Brokers (CIAB) reported average increases of approximately 16.9% for the year. In 2024, the pace moderated to roughly 8.2% on average, and 2025 data showed near-flat or negative pricing as the commercial property market softened. When insurance costs spike, tenants need to verify the allocation is based on actual documented premiums, not on a budget figure or an estimate.
40% of commercial CAM reconciliations contain material billing errors, with insurance overcharges among the most commonly flagged findings (Tango Analytics, 2023)
Amount allocated exceeds actual premium paid
The simplest overcharge: the CAM pool includes $95,000 for property insurance, but the actual annual premium was $80,000. The $15,000 difference has no invoice to support it.
This can happen when a property manager uses a budget-based allocation rather than the actual invoice amount. Budget-to-actual differences are supposed to be reconciled at year-end, but if the property management system defaults to the budgeted figure and the reconciliation is not adjusted, tenants pay based on projections rather than actuals.
It also happens when a blanket insurance policy covers multiple properties under a single master policy. The allocation of a master policy premium across individual properties is done internally by the landlord, and that methodology may not match what the lease requires.
The fix is to request the insurance certificate and the actual premium invoice. The certificate identifies the policy, the coverage period, and the carrier. The invoice shows what was paid. If the CAM allocation exceeds the premium, the difference is recoverable.
Unauthorized coverage types
Your lease defines what insurance costs are recoverable. Common authorized types include property and casualty insurance, general liability insurance for the common areas, and rental loss coverage. Financial services tenants like bank branches are particularly exposed here because their leases often contain broad security and liability pass-through language that landlords use to include coverage types well outside standard property insurance. What is frequently excluded:
Earthquake and flood insurance. These coverages protect against catastrophic events and are often added or dropped based on the landlord's risk tolerance, not the building's baseline operating needs. Treating these as a disputed category is common in well-negotiated leases.
Directors and officers (D&O) insurance. This is entity-level coverage protecting the landlord's principals. It has nothing to do with property operations and should not appear in the CAM pool.
Employee practices liability insurance (EPLI). Covers the landlord's employment disputes. Not a property operating cost.
Umbrella or excess liability policies above standard levels. Some umbrella coverage relates to the property and some extends to entity-level risks. If the umbrella was priced based on entity-wide exposure rather than the specific property's liability profile, the allocation method is questionable.
In Tin Tin Corp. v. Pacific Rim Park, LLC, 170 Cal.App.4th 1220 (Cal. Ct. App. 2009), the court reversed a finding that allowed the landlord's LLC taxes and fees to pass through the CAM pool. While that case addressed entity-level taxes rather than insurance, the reasoning applies: entity-level costs dressed up as property costs are not recoverable through operating expense definitions, regardless of how the landlord categorizes them internally.
Unreturned insurance refunds
When a landlord successfully disputes an insurance claim or receives a partial premium refund, that money should flow back to tenants through the CAM reconciliation in proportion to their pro-rata share. If the landlord receives a $30,000 premium adjustment and does not credit it to the pool, every tenant has been overcharged by their pro-rata share of that amount.
This also applies when a prior-year premium was billed and later adjusted. If the CAM pool for year three included $70,000 for insurance and the actual year-three premium turned out to be $60,000 after adjustments, the $10,000 difference should be credited in year four's reconciliation.
Worked dollar example
Your building's CAM pool for the year includes $112,000 for insurance. Your pro-rata share is 7%. Your share = $7,840.
You request the insurance documentation and find:
- Actual property insurance premium: $88,000
- General liability premium: $12,000
- Umbrella policy (entity-level coverage): $8,000
- Earthquake insurance (not referenced in your lease): $4,000
Total authorized insurance: $88,000 + $12,000 = $100,000 Unauthorized items: $8,000 (entity umbrella) + $4,000 (earthquake) = $12,000
Your share of unauthorized insurance: $12,000 x 7% = $840
Additionally, the total authorized premium ($100,000) is $12,000 less than the $112,000 allocated. Your share of that excess: $12,000 x 7% = $840.
Total overcharge for the year: $1,680. Over a 10-year lease with similar insurance costs, that is roughly $16,800, not counting any years where the premium spike from 2023 resulted in a higher-than-actual allocation.
15-20% of total CAM billed is recovered on average when tenants conduct a professional audit (Springbord Research, 2022)
How to check your insurance allocation
Pull the insurance line items from the CAM reconciliation with descriptions.
Request the actual insurance certificate(s) for the coverage period and the premium invoice(s). The certificate identifies the insured property, the coverage types, and the policy period. The invoice shows the premium paid.
Compare the CAM allocation to the documented premium. If the allocation is higher, the difference is an overcharge.
Check whether the coverage types in the policy match what the lease authorizes. Flag any coverage that does not relate to the property's operational risk.
If the property is covered under a blanket policy, request the allocation methodology. The method should be documented and should correspond to the property's share of the total insured risk.
Check whether any prior-year refunds or adjustments were credited to tenants.
For a deeper look at specific coverage types that constitute overcharges, see insurance overcharge deep dive. For the full dispute and recovery process, see CAM recovery.
What documentation to request
- The insurance certificate(s) for each coverage period in the reconciliation
- The premium invoice(s) showing actual amount paid
- For blanket policies, the allocation methodology used to assign costs to this property
- Documentation of any claims or premium adjustments that affected the coverage period
- The lease provision defining permitted insurance types
Related articles: property tax CAM passthrough covers similar overcharge patterns in the tax category, and utility double-billing CAM shows how excluded costs end up in the pool through a different mechanism.
Frequently asked questions
Is my landlord required to maintain specific insurance?
Most NNN leases require the landlord to maintain property and liability insurance in amounts meeting a standard (often $X million per occurrence). What types and coverage amounts are required is a lease negotiation point. What matters for the overcharge analysis is whether the specific insurance in the CAM pool corresponds to what the lease authorizes.
Can insurance premiums be legitimately higher than expected?
Yes. The commercial property insurance market experienced significant increases from 2021 through 2024, particularly for properties in coastal regions, areas prone to wildfire, or large urban properties with concentrated risk. Increases of 10-20% in a single year are not inherently an overcharge: they reflect actual market conditions. The overcharge question is whether the amount allocated corresponds to what was actually paid, and whether the coverage types are ones the lease permits.
What if the landlord refuses to provide the insurance certificate?
Your lease's audit rights clause typically entitles you to documentation supporting the reconciliation amounts. If the landlord refuses to provide an insurance certificate, document the refusal in writing. A landlord who cannot or will not support a CAM line item with documentation is in a weak position if the dispute escalates.
Does the pro-rata share apply to insurance the same way as other CAM items?
Yes, in most leases. Your pro-rata share of the authorized insurance premium is your share of the CAM pool. If the insurance is separately stated from the rest of CAM, check whether the denominator for the insurance allocation is the same as for the rest of CAM: some leases allocate insurance differently.
What if my lease caps insurance pass-throughs?
Some leases cap insurance at a percentage of the prior year's amount, or include insurance within a general CAM cap. If your lease has such a provision, apply the cap calculation to the insurance line item separately from other CAM expenses. See the CAM cap violation guide for how cap calculations work.
Frequently Asked Questions
How can insurance costs in a CAM reconciliation be overcharged?
There are three main ways: the amount allocated exceeds what was actually paid (the landlord uses a budget figure rather than the actual invoice), the coverage types included are ones the lease does not authorize (such as directors and officers insurance or earthquake coverage), or prior-year premium refunds and adjustments were not credited back to tenants.
What insurance coverage types are typically not permitted in CAM pass-throughs?
Commonly unauthorized types include: earthquake and flood insurance added after lease execution, directors and officers (D&O) insurance covering the landlord's principals rather than property operations, employee practices liability insurance (EPLI) covering landlord employment disputes, and umbrella or excess liability policies priced on entity-wide rather than property-specific exposure.
How do I verify the insurance amount in my CAM reconciliation is correct?
Request the insurance certificate for the coverage period and the actual premium invoice. The certificate identifies the policy, coverage period, and carrier. The invoice shows what was actually paid. If the CAM allocation exceeds the premium, the difference is an overcharge. For blanket policies covering multiple properties, request the allocation methodology used to assign costs to your property.
Can insurance premiums legitimately increase significantly in a single year?
Yes. Commercial property insurance increased 16.9% in 2023 and 8.2% in 2024 on average. Increases of 10 to 20% in a single year are not inherently an overcharge. The overcharge question is whether the amount allocated corresponds to what was actually paid, and whether the coverage types are ones the lease permits, not whether the premiums went up.
What if the landlord refuses to provide the insurance certificate?
Your lease's audit rights clause typically entitles you to documentation supporting the reconciliation amounts. If the landlord refuses to provide an insurance certificate, document the refusal in writing. A landlord who cannot or will not support a CAM line item with documentation is in a weak position if the dispute escalates to mediation or litigation.
CAMAudit classifies insurance line items from your CAM reconciliation and compares them to the coverage types authorized in your lease. The system also checks whether the total insurance allocation in the pool exceeds the documented premium amount and flags the pro-rata dollar impact.
Related: Property tax overallocation in CAM statements | Excluded services CAM charges | What is an NNN lease