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Commercial property insurance cost: the two bills an occupier pays
Occupiers pay for property insurance twice: their own policy and the landlord’s premium in pass-throughs. US property rates fell 13%. Did your bill?
Commercial property insurance reaches an occupier as two separate costs: the premium on the policy you buy, and the landlord’s property insurance premium you reimburse through operating expense or CAM pass-throughs. Almost all published cost guidance addresses only the first. The second is often the larger line, and it is the one you did not negotiate and may not be verifying.
The two bills, side by side
| Your own policy | The landlord’s policy | |
|---|---|---|
| What it covers | Tenant improvements, equipment, inventory, business interruption | The shell, structure, common areas, owner liability |
| Who buys it | You, to limits the lease requires | The landlord |
| How you pay | Directly, as premium | Indirectly, as an operating expense reimbursement |
| What you can verify | Everything | Whether the charge is permitted, allocated, and calculated correctly |
Why the published averages do not apply to you
The most-cited figure for commercial property insurance cost is about $108 a month, and Insureon publishes it as the median cost of policies sold to small business customers with five or fewer employees and revenue from roughly $50,000 to $200,000. That is a sound figure for that population and not a benchmark for a company operating dozens or hundreds of leased locations. Premium scales with insured value, catastrophe exposure, construction, deductible structure, and loss history, none of which a microbusiness median captures.
Property rates fell. Did your pass-through?
Marsh’s Global Insurance Market Index for Q2 2026 reported property rates down 12% globally and 13% in the US, the eighth consecutive quarter of decline, attributed to abundant capacity and insurer competition. If a landlord’s insurance pass-through rose materially in that same period, the increase needs an explanation. There are legitimate ones, including increased insured values or a policy year that does not line up with the market data, but the market direction gives you a reason to ask, and a reasonable landlord will answer.
What the lease actually permits
- Is insurance an includable operating expense at all, and which coverages?
- Is the premium allocated from a blanket program, and how?
- Are deductibles and self-insured retentions passed through?
- Is there a base year, and was it grossed up correctly?
- Are there caps, exclusions, or an audit right, and what is its deadline?
Every one of those answers lives in the lease and should be abstracted rather than rediscovered each reconciliation cycle. See our lease abstraction approach and our CAM recovery audit for tenants.
Frequently asked questions
Is commercial property insurance a tenant or landlord expense?
- Both, in different forms. The landlord insures the building and usually recovers the premium as an operating expense or CAM reimbursement. The tenant separately insures its own property and improvements, usually to limits the lease specifies.
Can a landlord pass its insurance deductible through to tenants?
- It depends on the lease. Some operating expense provisions expressly permit deductibles or self-insured retentions, some exclude them, and many are silent, which is where disputes arise.
How is a landlord’s insurance premium allocated among tenants?
- Usually pro rata by rentable area, though a landlord insuring many properties under one program must first allocate a share of the blanket premium to the building, a step tenants most often cannot see.
Are property insurance costs going up or down right now?
- Down, for property specifically. Marsh’s Q2 2026 index reported property rates down 12% globally and 13% in the US in the eighth consecutive quarter of decline, while US casualty rates rose 7% in the same quarter.
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