The Weight of Insurance in Net Lease Agreements

There are many types of lease agreements and the leasing insurance requirements vary for every contract. Depending on the type of agreement, the terms may be flexible, including the insurance the tenant must obtain. Net leases are among the most adjustable types of lease agreements. There are four sub-types: single, double, triple, and absolute triple net leases. Triple net and absolute triple net lease agreements are the most costly to tenants in that the tenants are liable for the cost of all related insurance and many other expenses.

The Difference Between Triple and Absolute Triple Net Leases

A triple net lease is not usually the first choice of any tenant. In addition to the cost of rent, the tenant must pay for all site maintenance, property taxes, and insurance. The absolute triple net lease requires the tenant to pay for even more. In essence, the absolute triple net lease requires the tenant to function as the owner of the building without actually owning the property.

Types of Insurance With a Triple Net Lease

While these insurance requirements may vary, some types of insurance are fairly standard, according to Arroyo Insurance Services.

  • property insurance
  • liability
  • business income
  • tenants improvements and betterment coverage

You should always examine a lease carefully to make sure you understand the insurance requirements. An insurance professional will be able to help you ensure that you have all the necessary coverage to fulfill your leasing agreement.