Tenant Insurance Requirements in REIT Leases: Certificates, Additional Insured and Limits

Start with the lease insurance exhibit, not the certificate. A REIT landlord's insurance requirements are contract terms, and they can differ by property and by tenant. A review usually sorts them into liability coverage, property coverage for the tenant's improvements and contents, business income, workers' compensation and any specialized coverage such as liquor liability. The lease may also require the landlord, its lender or the property manager to receive specific additional insured, loss payee, mortgagee, waiver of subrogation or primary wording treatment. An ACORD 25 certificate summarizes insurance information, but it does not amend the policy (ACORD 25, as published by the Texas Department of Insurance (opens in a new tab)). Send the lease exhibit and your current policy documents to your agency and ask which endorsement provides each right the lease asks for.

Start with the lease exhibit, not the certificate

Being a REIT does not create one national standard for tenant insurance. Lease terms vary by landlord, property, tenant operations and financing. Realty Income, for example, said in its 2018 Form 10-K (opens in a new tab) that its tenants generally must carry liability and property damage insurance, with general liability requirements that depend on the tenant and its industry. That describes one landlord's portfolio, not a rule for yours.

So, the useful order of work is lease first, policy second, certificate last. The exhibit tells you what the landlord asked for. The policy and its endorsements tell you what you have. The certificate only reports the second against the first.

Which coverage categories a commercial lease can require

Each category below appears in public REIT disclosures, and each one is lease-specific. Whether your lease asks for it, and at what limit, is in the exhibit.

• General liability, plus umbrella or excess liability: the core third-party liability coverage. Our guide to general liability vs professional liability insurance explains what general liability covers, and do I need umbrella insurance explains the umbrella layer.
• Property on improvements and contents: coverage for tenant improvements and betterments, fixtures, inventory, equipment and other contents. Realty Income described property damage coverage generally set at not less than the full replacement cost of improvements, excluding slab, foundations, supports and other customary exclusions, and noted that some tenants carry flood and earthquake insurance.
• Business income and extra expense: where the lease addresses lost income or added costs after a covered loss.
• Workers' compensation and employers liability: for tenants with employees.
• Liquor liability: where the tenant serves or sells alcohol.

The broader question of what a small business carries outside a lease sits in our guide to what insurance a small business needs. Public filings describe categories and, in some cases, replacement cost concepts; they do not set a limit every tenant must carry.

Who has to be named, and in what role

A lease can ask for several parties to appear on your coverage, and each role means something different:

• Certificate holder: the person or organization that receives the certificate. Being the holder does not create insured status.
• Additional insured: a party added to your liability policy by endorsement, so it has rights under the policy within the endorsement's limits.
• Loss payee: a party that is paid on a property loss to the extent of its interest.
• Mortgagee: a lender whose interest in the property is protected under the property policy.

Essential Properties Realty Trust said in its 2024 Form 10-K (opens in a new tab) that its triple-net tenants are generally required to carry general liability and property insurance, and that leases generally require the REIT and its mortgage lenders to be additional insureds on liability policies and additional insureds, loss payees or mortgagees on property policies. Read your exhibit for the exact entity names, because a landlord, its lender and its property manager can be three different legal entities. Lender requirements on the landlord's side are covered in our guide to REIT lender insurance requirements.

What an ACORD 25 certificate proves

The ACORD 25 is the standard certificate of liability insurance. The 2016/03 edition states that it is issued as a matter of information only and "confers no rights upon the certificate holder," and that it does not amend, extend or alter the coverage of the listed policies or create a contract between the insurer, producer and holder (ACORD 25, 2016/03 edition (opens in a new tab)).

The form also says that if the certificate holder is an additional insured, the policy must have additional insured provisions or be endorsed, and that a waiver of subrogation may require an endorsement on certain policies. The boxes work the same way. The additional insured box reports that the policy has the provision or endorsement; it does not add one. The waiver of subrogation box reports a waiver only when the policy includes it. When a landlord's risk team rejects a certificate, the answer sits in the policy and its endorsements, not in the certificate wording.

Why the policy and its endorsements control

An endorsement changes the policy and becomes part of the insurance agreement (NAIC (opens in a new tab)). That is why the rights a lease asks for live in endorsements.

Additional insured. Two common forms appear in Texas Department of Insurance certificate examples: ISO CG 20 11 04 13, "Additional Insured, Managers or Lessors of Premises," and ISO CG 20 26 04 13, "Additional Insured, Designated Person or Organization." The endorsement decides who is insured, for which premises or operations, and with what limits. Commercial additional insured forms commonly limit coverage to liability caused in whole or in part by the named insured's acts or omissions, subject to their wording. In Texas, a certificate cannot name a holder as an additional insured when the policy contains only a blanket endorsement (Texas Department of Insurance certificate FAQ (opens in a new tab)). Ask the agency for the actual endorsement and confirm the named entity, premises, operations, completed operations treatment and policy period.

Waiver of subrogation. Subrogation is an insurer's right to pursue a responsible third party after paying a loss. A waiver limits that right for the party and coverage the endorsement names. ISO workers' compensation form WC 00 03 13 is a waiver of recovery endorsement, and ISO commercial auto form CA 04 44 10 13 is a waiver of subrogation form (NAIC Journal of Insurance Regulation (opens in a new tab)). A lease may ask for a waiver on liability, property, workers' compensation or more than one line, and each line needs its own support.

Primary and noncontributory. Primary wording addresses which insurance responds first when more than one policy could cover a loss. Noncontributory wording addresses whether the additional insured's own insurance has to contribute after your policy responds. The effect depends on the policy, the endorsement, the jurisdiction and the other insurance provisions, and typing the words onto a certificate does not create them.

Cancellation notice. A certificate cannot promise cancellation or nonrenewal notice by itself. Notice rights come from the policy, an endorsement or applicable law, so ask which provision supports any notice the lease requires.

Who insures the building, improvements and contents

The lease decides whether the landlord or the tenant carries the risk for the building, tenant improvements and betterments, fixtures, inventory, equipment and other contents. Public REIT disclosures commonly put property insurance for tenant-related property on the tenant, while the REIT may insure its own buildings or lender-required interests. One public lease exhibit filed with the SEC, for example, required the tenant's commercial property coverage to reach inventory, furniture, fixtures, equipment and alterations (opens in a new tab).

A commercial property policy generally treats your improvements and betterments as property in which you have an interest, but valuation, ownership, removal and post-loss treatment depend on the policy form, declarations, endorsements and lease. Compare the lease's definitions of "tenant improvements," "alterations," "fixtures," "contents" and "restoration" with your property policy, and ask the agency to clarify any term that does not line up.

A lease may also include a mutual waiver of subrogation, where landlord and tenant agree not to pursue each other for specified covered property losses to the extent the loss is insured and the policies permit it. The waiver does not amend either property policy. Ask the agency and the landlord to identify the exact property policy condition and waiver endorsement that govern the lease clause.

What state law says about certificates

Several states regulate certificates directly, and their rules point the same way.

• Connecticut: Conn. Gen. Stat. § 38a-322a (opens in a new tab) prohibits issuing a certificate with false or misleading information, altering a certificate unless it accurately reflects the policy, representing that a certificate creates additional rights, and claiming that amending a certificate changes the policy.
• New York: a certificate is not a contract and is not meant to confer rights beyond the policy, and a producer may not amend, expand or alter policy terms without authorization and, where required, regulatory approval (New York DFS Opinion 04-06-04 (opens in a new tab)).
• Texas: Texas Insurance Code Chapter 1811 (opens in a new tab) regulates certificates for property and casualty risks, including content, notice provisions and penalties, and a certificate cannot create additional insured or waiver rights beyond the policy and endorsements (Texas Department of Insurance (opens in a new tab)).

A landlord can ask for wording; it cannot get coverage changed through the certificate.

What to send the insurance agency

A complete package lets the agency answer in one pass:

1. The complete lease and its insurance exhibit.
2. The landlord's certificate instructions and certificate holder address.
3. Current declarations pages.
4. Liability and property endorsements.
5. Workers' compensation documents.
6. Business income documentation where the lease requires it.
7. The exact names of the landlord, lender and property manager.
8. Renewal dates.

Then ask:

• Which lease requirements does the current policy already satisfy, and which need endorsements?
• What exact endorsement form numbers apply?
• Who is the named insured, certificate holder, additional insured, loss payee and mortgagee?
• Does the endorsement name the landlord, lender and property manager, and does it apply to premises operations, ongoing operations, completed operations or all of them?
• Is the waiver of subrogation available for liability, property, workers' compensation or more than one line?
• Is the policy primary where the lease requires it, and what provision supports any cancellation or nonrenewal notice?
• Which property belongs to the landlord, which to you, and are improvements, fixtures, inventory, equipment, business income and extra expense addressed?
• Does your operation trigger liquor, pollution, cyber, professional or other specialized exclusions?
• Can the agency send the relevant declarations and endorsements to the landlord?

What to do when the policy cannot match the lease

Sometimes a requirement cannot be met with the current policy, or not without a change in coverage. Ask the agency which part of the requirement cannot be matched and for the exact policy or endorsement language that applies. Ask for the wording to send back to the landlord to explain the difference. Then ask the landlord which contract term controls and whether the lease allows an alternative.

Realty Income's 2018 filing noted that tenants may fail to keep adequate coverage, that its leases may not permit the insurance levels it wants, and that uninsured or underinsured losses could affect its capital and revenue. Who pays for a required endorsement, and whether the current policy can be endorsed or must be replaced, are questions for the agency and the lease.

How to verify the agency and file a complaint

Use the insurance department in the state where the leased property is located; your state insurance department (opens in a new tab) has a license lookup for agencies and producers. In Connecticut, the Insurance Department's licensing page (opens in a new tab) links to the license lookup on the NAIC State Based Systems platform.

For a certificate or policy dispute, start by asking the agency and insurer for the policy and endorsement language. If the issue stays unresolved, use your state insurance department's complaint process. Connecticut's Consumer Affairs Unit (opens in a new tab) accepts written complaints about insurers, agents and adjusters and asks for the insurer, policy number, type of insurance and a summary of the issue; complaints can be started on its complaint page (opens in a new tab).

Frequently asked questions

Short answers on tenant insurance in REIT leases.

Does the certificate holder become an additional insured?

No. The policy must contain the applicable additional insured provision or endorsement, and the certificate only reports it.

What does a waiver of subrogation do in a lease?

It limits the insurer's right to recover from a party named in the endorsement after paying a loss. Its reach depends on the endorsement and the line of insurance it attaches to.

Can a certificate promise 30 days' cancellation notice?

Only when the policy, an endorsement or applicable law provides that notice right. In Texas, a certificate cannot create a notice right the policy does not provide.

Who insures tenant improvements and contents?

The lease assigns that risk. Public REIT disclosures commonly place tenant property obligations on the tenant, but the exact lease language controls.

Your next step

Send the lease exhibit, your declarations pages and your current endorsements to your agency with the questions above, and ask for a written answer on any requirement the policy cannot match. If you need an agency that places commercial coverage where the property is located, Riskado lists insurance agencies across the US in our agency directory.