What You Need to Know About Triple Net Leases: Guidance for an Insurance Agent 

• By: Nancy Germond
• April 14, 2026

As an insurance agent, you want to help your clients understand the insurance requirements in commercial real estate leases and ensure you place the correct coverage for the risk. While you never want to give legal advice, and you always want to recommend (in writing) that your clients consult with their attorneys before signing leases, you can help them understand the insurance requirements in commercial lease agreements.  

If your clients do not understand the different types of commercial leases, they may end up with coverage gaps or other financial surprises such as the responsibility for replacing their building’s HVAC system.  

Let’s discuss the common lease types and highlight the insurance risks that can affect both property owners and tenants. 

Understanding Commercial Lease Agreements 

Before your clients sign a lease, it is essential to understand which expenses they assume. As an agent, your role is to review the insurance requirements in the least to understand the coverage your commercial client will need. 

Here are the leases you will see often.  

1. Gross lease: Your client pays only rent. The building owner manages property taxes and usually only property insurance. 

2. Single net lease: Your client pays rent, utilities and property taxes. 

3. Double net lease: Your client pays rent, utilities, property taxes and building insurance. 

4. Triple net lease (NNN): Your client pays rent, utilities, property taxes, building insurance and most maintenance expenses for the structure and the common areas. 

You may see them called different names such as modified gross leases or other terms.  

The Hidden Risk of Triple Net Leases for Property Owners 

Triple net leases are popular among landlords who want a “hands-off” approach to property management, pushing the maintenance burden onto the tenant. However, triple net leases hold a few risks to both the building owner and the tenant.  

For the building owner, they are trusting a tenant they may have no history with to maintain their buildings, e.g., annual maintenance on HVAC systems, security upgrades, etc. This poses a big risk to the building owner because many business owners do not prioritize protecting or maintaining property they do not own. Additionally, trusting that a tenant obtains the proper insurance coverage is also a risk, since a triple net lease transfers the insurance procurement to the tenant. 

As an agent, you know that standard insurance policies often do not provide the right protection for the risk without endorsements. Many times, carriers now write roofs on a roof replacement cost schedule; water damage claims may go unpaid because the tenant did not discover the leak promptly, and more risks may go uncovered. For the owner, asking their tenants to negotiate insurance for their multi-million-dollar property may expose them to major losses should a partial or uncovered loss occur. Unless the tenant has a very skilled risk manager or insurance agent who understands the details, that owner could face significant gaps in coverage. 

The Danger for Commercial Tenants 

You want your clients to understand that if they sign a triple net lease, they are often responsible for far more than they expect. The lease agreement may make them responsible for risks their current insurance policy might not cover. These leases regularly transfer a wide range of maintenance and replacement responsibilities to the lessee, which can lead to unexpected and untimely costs. 

Additionally, when your clients take possession of a property without a thorough inspection, with a NNN lease, they may be assuming responsibility for a building that is in extreme disrepair. Items like an aging roof, faulty or antiquated wiring, Ansul systems in disrepair —these are only a few of the issues your client may inherit.  

As their insurance agent, you want your clients to understand that permanent fixtures and property improvements in your leased space must also be insured in an NNN lease. For example, if a lightning strike damages the roof-mounted air conditioning system, the NNN lease requires the tenant to cover the repair or replacement, even if their insurance does not.  

These types of losses can cause situations where clients discover after the fact that their policies do not cover these types of losses, leaving them fully responsible for the bill. The same issue can arise with items such as walk-in freezers, steam boilers, specialized processing equipment, security systems, window glazing, elevators and escalators. It is crucial that insurance agents offer the types of coverage when available that a tenant needs to meet their lease requirements, and to inform them of potential gaps in coverage.  

Documentation of any coverage offering and the rejection of that coverage is critical should an uncovered loss arise.  

How to Protect Yourself and Your Client  

Your role as an agent can help your clients avoid uninsured losses by taking a proactive approach to your lease agreements. Here are some recommendations you can use and advice you can offer your clients after you review the insurance requirements in their lease.  

• Your clients should never sign a lease agreement without a review from a real estate attorney. Your clients should always have a qualified attorney who reviews the lease agreement before your client signs. They can spot aggressive language that pushes too much liability onto their clients and help you as their agent limit the contractual liabilities they assume. 

• Your clients should always consult with a qualified insurance broker. Not all agents specialize in writing commercial property. While as an agent you should read the lease, evaluate it only for insurance language and even if you see a potential non-insurance issue, it is not your job to point that out. Remember to add commercial property endorsements to your client’s policy to cover specific building equipment or unscheduled property. 

• Remind your clients they can negotiate for better terms in a softer real estate market. Your client should understand the current commercial real estate market. When the market softens such as it did significantly during COVID, your clients can leverage that softer market to renegotiate contractual language that formerly favored the landlord. 

• Depending on your state’s standard of care, your role as an agent is to help your clients recognize uninsurable obligations. Some leases contain obligations the client simply cannot insure, such as broad requirements to cover all types of property for all types of loss. Your clients and their attorneys should search out language regarding uninsurable obligations and negotiate their removal. Otherwise, your client faces significant out-of-pocket losses, and Murphy’s law usually means those unexpected losses occur at the worst time possible.  

• Walk the property. There is no substitute for visiting the property to look for potential issues that may be difficult to cover. However, recognize if you do visit the property and do not notice something such as outbuilding or specialized mobile equipment for example, and a loss involving that building or feature, this will certainly arise at trial.  

What Can Be a Disaster in a Commercial Lease Agreement 

Here are some issues we often see in commercial leases. 

• Making the client responsible for the building’s HVAC or electrical system, including in some leases requiring the tenant to bring the building up to code.  

• Responsibility for capital repairs such as a foundation issue or a building collapse.  

• A lack of a financial cap on a NNN lease. For example, water bills may suddenly spike yet the tenant is responsible for supplying water to all exterior foliage.  

• A “ratchet clause” that means rent will never go down despite market conditions. 

However, remember you are not an attorney, so it is not your role to point out these requirements, only to strongly recommend a competent real estate attorney reviews your client’s lease. In fact, your client can allege you practiced law without a license, a common allegation defended by insurers in E&O litigation. 

According to Lezlee Liljenberg, Insurance and Rea Estate expert Witness, “If your client is considering a triple-net lease, they may be committing to something they cannot afford, especially when it comes to the replacement of HVAC systems. This can be very costly, and the tenant needs to understand the insurance policy will not respond to the maintenance or replacement of the system. 

“Stick directly with the topic of insurance when discussing the lease agreement,” Liljenberg recommends. “Be helpful but do not cross the line on giving advice from experience or your past. You could create an advisory position that could establish a special relationship and set your agency up for a potential lawsuit down the line.” 

By following the advice in this article, you can help align your clients’ coverage with their lease obligations. 

Last updated: April 2026

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