Insurance premiums are rising 10-20% annually, making it critical to limit which policies your landlord can pass through and to verify charges regularly.
An insurance pass-through clause defines which insurance costs the landlord can charge to tenants as part of operating expenses. This typically includes property insurance, general liability insurance, and sometimes umbrella policies. The clause should specify which policies qualify, how costs are allocated, and what limits apply.
Insurance is one of the fastest-growing CAM expense categories, often increasing 10-20% annually in some markets. Landlords may pass through premiums for policies that provide coverage beyond what is necessary for building operations, include deductible payments, or charge for insurance on landlord-owned equipment. Without a clear clause, tenants have limited ability to challenge inflated insurance pass-throughs.
“Operating Expenses shall include the cost of property insurance (all-risk or equivalent), commercial general liability insurance, and such other insurance as Landlord is required to carry under any mortgage or ground lease. Insurance costs shall not include: (a) premiums for earthquake or flood insurance unless required by Landlord's lender; (b) any self-insured retention or deductible amount; (c) premiums attributable to Landlord's personal property or business income; or (d) any increase in premiums resulting from Landlord's negligence or the acts of another tenant. Tenant shall have the right to request copies of insurance policies and premium invoices.”
This is illustrative language only. Your actual lease language controls your rights.
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10-20%
Commercial property insurance premiums have increased an estimated 10-20% annually in many markets since 2020 [industry estimate]
Source: Marsh / Insurance Market Report (2024)
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