According to Risk Strategies' 2025 State of the Insurance Market report, following years of challenging renewals and rate increases, property market conditions have improved considerably. Most high-performing accounts are now receiving rate reductions and improved terms as property insurers return to profitability. However, the market remains fragile, and a major catastrophic event could quickly reverse this trend.

The liability coverage landscape tells a different story. Risk Strategies reports that liability coverage remains challenging, with insurers continuing to underwrite at deeper levels, implement higher rates, and tighten terms. In 2024, the U.S. experienced 27 natural catastrophes with losses exceeding $1 billion each, making it the fourth-costliest year on record.

Key Coverage Requirements

Commercial General Liability: Most lease agreements now require tenants to carry liability insurance with specified limits, typically $1 million per occurrence. Landlords should require endorsements that address risks specific to the tenant's intended use, such as liquor liability for restaurants.

Property Insurance: Tenants must insure their personal property, and lease agreements may hold them responsible for damage to building components, including HVAC equipment, roof coverings, and glass.

Workers' Compensation: As noted by NAIOP, tenants must purchase workers' compensation insurance, which is required in most states. Building owners should consider obtaining additional coverage in case a tenant lacks proper workers' compensation, as they could face liability claims as the property owner.

Business Interruption: Landlords may require tenants to carry business interruption insurance to cover revenue loss during casualty events, while landlords themselves should consider rent loss insurance to protect cash flow.

COI Best Practices

Verify Coverage Before Work Begins: Property managers must collect and review COIs from all vendors, subcontractors, and service providers before allowing work on-site. The standard ACORD 25 form remains the industry standard for documenting liability coverage.

Monitor Expiration Dates: COI tracking has become essential. Updated certificates should be required at a minimum annually, with high-risk vendors requiring quarterly verification. Coverage lapses can create liability windows during which property owners are responsible for incidents.

Require Additional Insured Status: Property managers should ensure they are named as additional insureds on vendor policies to extend coverage for claims arising from vendor activities on the property.

Include a Waiver of Subrogation: This prevents insurance companies from pursuing recovery from the property owner after paying claims arising from vendor activities.

According to the Insurance Information Institute, approximately 90% of commercial buildings are underinsured, with 68% underinsured by 25% or more based on property appraisals. With more than $1 trillion in commercial real estate loans maturing in 2026, accurate property valuations have become critical.

Real estate professionals should start renewal processes 90-120 days before expiration, work with specialty brokers who understand the real estate sector, and leverage technology to track compliance across all vendor and tenant relationships. Comprehensive documentation of risk mitigation measures, from wildfire prevention to water damage protocols, can help secure more favourable coverage terms.

The insurance landscape continues to evolve rapidly. By staying informed about market conditions and maintaining rigorous insurance documentation practices for both tenants and vendors, real estate leaders can better protect their assets while positioning themselves for favourable renewal outcomes.