Insurance & Deductibles in Commercial Leases: Who Pays When Something Happens?

Insurance clauses can feel like boilerplate—until there’s a claim. Then the exact wording determines:

who pays the deductible
whether rent continues while repairs happen
whether you’re responsible for damage you didn’t cause

This guide explains the most common insurance terms in commercial leases and the tenant protections to ask for. (Not legal advice.)

The three core insurance buckets

Most leases require:

General liability (tenant’s business operations)
Property insurance (often tenant’s contents and improvements)
Business interruption (optional, but important for certain businesses)

The landlord typically insures the building, but the lease may push costs back to tenants through CAM or additional rent.

Deductibles: the hidden landmine

Even if the landlord carries the policy, a large deductible can become your problem if the lease says:

“Tenant shall pay all deductibles…”

Deductibles can be huge in certain risk categories (water damage, hail/wind, flood).

Tenant-friendly approaches:

Deductible responsibility tied to fault/control
Deductible caps
Deductible allocation rules for multi-tenant events

Additional insured & “waiver of subrogation”

You’ll often see:

Landlord must be named as an additional insured on tenant’s liability policy.
A waiver of subrogation so insurers don’t sue the other party after paying a claim.

These can be standard, but tenants should confirm:

exact endorsements required
whether they increase premiums materially
whether the landlord is asking for unusual coverages

Casualty clauses: what happens after damage

Insurance and casualty clauses work together.

Key questions:

Does rent abate (pause/reduce) if the premises can’t be used?
Who decides whether repairs happen vs. termination?
What is the repair timeline?
Are you required to keep paying CAM even if closed?

Tenant-friendly approach:

rent abatement when the space is not usable
termination right if repairs exceed a reasonable time

Common red flags

Tenant insures the building (not just contents) in a multi-tenant property
Tenant pays building-wide deductibles regardless of fault
Tenant indemnifies landlord for landlord negligence
No rent abatement despite loss of use

How BizLeaseCheck helps

BizLeaseCheck flags:

unusual insurance requirements
deductible shifting language
broad indemnity clauses
casualty language that keeps rent running during closure

Upload your lease for a fast first-pass review:

/analyze

Not legal advice

This article is for informational purposes only and is not legal advice. Insurance requirements and claim handling vary by policy and jurisdiction. Use this as a checklist and confirm specifics with qualified professionals.