Signing a lease soon? Send us the insurance section of your lease before you sign. We will tell you what it actually requires, flag anything that cannot be met as written, and quote the whole package across 30+ carriers.
What Insurance Does a Commercial Tenant Need?
Every lease is different, but most commercial leases ask a tenant for some version of the same six things:
- General liability, usually $1 million per occurrence and $2 million aggregate, with the landlord named as an additional insured.
- Tenant legal liability (also called damage to rented premises or fire legal liability) for damage you cause to the space itself. General liability generally excludes it, and many policies default it to a low limit.
- Property coverage for your improvements, equipment, furniture and inventory. The landlord’s policy covers the building, not what you put in it.
- Business income, so the rent still gets paid if a covered loss closes you for a few months.
- Workers’ compensation, required in Colorado once you have employees.
- Liquor liability, if you serve or sell alcohol. Restaurants, bars and taprooms should expect to see it.
Some leases add commercial auto, an umbrella, or specific endorsements by form number. The exhibits below show how far that can go.
Commercial Lease Insurance Requirements Exhibits)
Exhibit 1)
1. Tenant shall procure and maintain at its own expense General Liability Insurance with respect to the use and occupancy of the Premises with limits of not less than $1,000,000 per occurrence with respect to bodily injury, and Tenant Legal Liability with limits of not less than $500,000 for property damage. Such insurance shall name Landlord as an additional insured.
2. Tenant shall also procure and maintain at its own expense Renter’s Insurance covering Tenant’s personal property located in or on the Premises in an amount equal to at least the replacement value of such personal property.
3. Tenant shall deliver copies of the insurance policies referenced above or certificates of such policies to Landlord within ten days of this Lease date and thereafter not less than ten days prior to the expiration of the term of each insurance policy.
4. All insurance policies maintained by Tenant shall contain a provision that the issuing insurance company will give Landlord thirty days written notice in advance of any cancellation, lapse or reduction in the amounts of insurance. If Tenant fails to procure and maintain the required insurance policies, Landlord may obtain the necessary policies, and Tenant shall be responsible for immediate payment of Landlord’s cost of obtaining such policies.
The landlord was wise to include a Tenant Legal Liability requirement of $500,000, a coverage that is frequently overlooked in commercial leases. Many commercial policies will default tenant legal liability (sometimes referred to as fire legal liability) to a $100,000 limit, although it can be increased through endorsement.
Many tenants (and landlords) assume that General Liability insurance would respond if a tenant causes damage to their own unit. In reality, General Liability policies generally exclude damage to property in the tenant’s care, custody, or control, which includes the leased premises.
Tenant Legal Liability is the coverage designed to fill that gap, most commonly for fire damage, and without it, the landlord may have limited recovery options if a tenant causes significant damage to the space.
Exhibit 2)
Tenant shall obtain and keep in force a Commercial General Liability policy of insurance protecting Tenant and Landlord as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers or Landlords of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement” for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “Insured Contract” for the performance of Tenant’s indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Tenant nor relieve Tenant of any obligation hereunder. All insurance carried by Tenant shall be primary to and not contributory with any similar insurance carried by Landlord, whose insurance shall be considered excess insurance only.
Exhibit 3)
Tenant must maintain in full force and effect at all times during the Lease term insurance policies complying with the following:
- a. Commercial General Liability Insurance
- Insuring Tenant against liability for bodily injury, death, property damage and personal injury occurring at the Premises, or resulting from Tenant’s use or occupancy of the Premises, Project, Building, Property, or Common Areas or resulting from Tenant’s activities or products in or about the Premises.
- Occurrence basis.
- Limits of:
- One Million Dollars ($1,000,000) per occurrence
- Two Million Dollars ($2,000,000) aggregate
- Two Million Dollars ($2,000,000) products–completed operations aggregate
- Policy must be endorsed to name Landlord, the property manager, and their principals, officers, directors, employees, partners, members, agents, contractors and/or assigns and such others as are designated by Landlord as additional insureds.
- Additional insured endorsement equivalent to CG20111185 or equivalent as reasonably determined by Landlord.
- Additional insured coverage must be primary insurance.
- Any insurance carried by the additional insureds must be excess and non‑contributing.
- Policy must not be canceled, changed, or coverage reduced without at least thirty (30) days written notice to additional insureds.
- If the policy insures more than one location, it must be endorsed so limits and aggregate apply per location using endorsement CG25041185 or successor.
- Policy must contain:
- Severability of interest
- Waiver of subrogation
- Contractual liability coverage
- Cross‑liability endorsement or clauses
- b. Fire and Property Damage Insurance
- Special Form plus flood coverage.
- Insuring Tenant against loss from physical damage to Tenant’s personal property including tenant improvements, inventory, stock, trade fixtures and improvements within and around the Premises.
- Coverage for the full actual replacement cost.
- c. Plate‑Glass Insurance
- At actual replacement cost.
- d. Boiler and Machinery Insurance
- If applicable.
- e. Product Liability Insurance
- Including Liquor Liability insurance if Tenant’s operations include the distribution, sale, or consumption of food and/or alcoholic beverages.
- f. Workers’ Compensation Insurance
- Sufficient to comply with all applicable laws.
- Must be endorsed to provide thirty (30) days written notice of cancellation to Landlord.
- g. Contingent Liability and Builder’s Risk Insurance
- In amounts and with coverage satisfactory to Landlord for alterations, construction, or improvements undertaken by Tenant.
- h. Business Income and Extra Expense Insurance
- i. Comprehensive Auto Liability Insurance
- Combined single limit of One Million Dollars ($1,000,000) for bodily injury and/or property damage.
- Must cover:
- Any autos
- Hired autos
- Non‑owned autos
- Auto blanket contractual form CA0029
- Must provide thirty (30) days written notice of cancellation to Landlord.
- j. Employers Liability Insurance
- One Million Dollars ($1,000,000) per accident
- One Million Dollars ($1,000,000) disease each employee
- One Million Dollars ($1,000,000) policy limit
3. Carrier & Policy Standards
- All insurance policies must be in form satisfactory to Landlord.
- Policies must be issued by carriers admitted to do business in Colorado.
- Minimum A.M. Best rating of A/VI or better and/or otherwise acceptable to Landlord.
- Property insurance must contain a waiver of subrogation against Landlord, its principals, employees, agents, and contractors.
- Each policy of liability insurance must have no deductible in excess of $5,000.
4. Certificates & Compliance
- Prior to Tenant or any contractor entering the Premises, Tenant must deliver certificates of insurance to Landlord.
- Certificates must:
- Certify issuance and premium payment
- Include required coverage
- Include endorsements naming Landlord as additional insured
- Include primary/non‑contributory wording
- Renewal or replacement certificates must be provided no less than thirty (30) days prior to expiration or cancellation.
- Landlord may inspect and/or copy policies at any time.
- Landlord may require increased limits if coverage is deemed inadequate, subject to industry norms for similar businesses.
5. Indemnification Coverage
- Commercial General Liability insurance must specifically insure Tenant’s performance of indemnification obligations under the Lease.
- Nothing limits Tenant’s liability under the Lease indemnification provisions.
6. Right to Make Claims
- If Landlord or its agent is an additional or named insured, Landlord has the right to make claims directly under the policy for losses incurred.
Exhibit 3 has the most shocking commercial lease insurance requirements of any lease we’ve ever come across and is a good example of a lease that appears extremely thorough but becomes problematic in real‑world application. The commercial lease insurance requirements are dense, highly technical, and clearly drafted with the intent of shifting as much risk as possible to the tenant. While that intent is understandable, this type of language often creates more friction than protection.
At a glance, the lease does several things “right.” It clearly states occurrence and aggregate limits, requires the landlord to be named as an additional insured, mandates primary and non‑contributory wording, imposes carrier rating standards, limits deductibles, and attempts to regulate certificates, endorsements, indemnification, and claim rights. On paper, this reads like a sophisticated, well‑protected landlord position.
In practice, however, this is where leases frequently drift away from how insurance actually works.
Many of the endorsement requirements referenced are outdated, unnecessary, or difficult to satisfy even when a tenant carries strong, appropriate coverage. Language requiring specific endorsement names, prohibiting any intra‑insured exclusions, mandating cancellation notice to landlords, and granting landlords the “right to make claims directly” often exceeds what carriers will certify or guarantee. Certificates of insurance cannot reliably confirm many of these provisions, yet the lease treats them as enforceable safeguards.
More importantly, despite the technical depth of this exhibit, it completely omits Tenant Legal Liability (Damage to Rented Premises). This is a significant oversight. General Liability policies generally exclude damage to property in the tenant’s care, custody, or control, meaning damage to the leased space itself is often not covered except in limited circumstances. By focusing heavily on endorsements, form language, and administrative controls while failing to require Tenant Legal Liability, this lease misses one of the most practical and meaningful protections a landlord can require.
The result is a lease that looks impressive, but often proves frustrating for tenants, brokers, and property managers alike. Tenants may be properly insured yet technically “non‑compliant.” Brokers are forced to interpret language rather than verify it. Landlords may believe they are protected, only to discover gaps or disputes when a claim occurs.
For these reasons, we do not recommend landlords use a lease structured like Exhibit 3. While it is well‑intentioned, it prioritizes legal precision over operational reality and creates a false sense of security. Strong commercial lease insurance requirements should be clear, current, and focused on actual loss scenarios, not written to sound exhaustive at the expense of practicality.
Your lease dictates liability coverage, but if you have staff you’ll also need workers’ comp. Here’s how much workers’ comp insurance costs in Colorado.
Signing a lease for a restaurant or coffee shop? The landlord’s requirements are only the start. Our restaurant and bar insurance page covers liquor liability, spoilage and equipment breakdown, and our business insurance page covers the rest of the account.
Before you sign, let us read it. Send us your lease’s insurance exhibit and we will compare it with how policies are actually written, tell you what you need, and quote it across 30+ carriers. We review the insurance section only; for the rest of the lease, talk with your attorney.
