Glossary of Single-Tenant Property Insurance Terms
Short, plain definitions of the terms that come up when you own, lease or insure a single-tenant commercial building. See the complete guide to single-tenant property insurance for how they fit together.
Absolute net lease
A lease in which the tenant pays essentially all costs of the property, including taxes, insurance, maintenance and often structural repairs and the roof. Definitions vary, so read the lease.
ACORD 25
The standard certificate of liability insurance. It lists general liability, umbrella, auto and workers' compensation policies. It is informational and does not change the policy.
ACORD 28
The standard evidence of commercial property insurance. It shows property coverage on a building, the insured, and any mortgagee or loss payee. Lenders usually ask for it.
Actual cash value (ACV)
What property is worth after depreciation. A policy that pays ACV pays less than the cost to replace the item new. Roofs are often settled on ACV.
Additional insured
A party added to a liability policy by endorsement who receives coverage rights under it. Landlords are usually additional insureds on a tenant's liability policy.
Blanket policy
One policy covering several buildings or locations, often with a shared limit. It returns one premium unless the carrier also provides a rating by location.
Business income (rental value)
Coverage that replaces lost income, including a landlord's rent, while a covered loss keeps a building from operating or being rented.
CAM (common area maintenance)
Charges for maintaining shared areas, passed through to tenants in multi-tenant properties. Insurance is sometimes billed alongside CAM.
Certificate holder
A party that receives a copy of a certificate of insurance. A certificate holder has no coverage rights under the policy.
Certificate of insurance (COI)
A document summarizing coverage as of the day it was issued. It does not amend, extend or alter the policy.
Coinsurance
A policy condition that reduces a claim payment if the building is insured for less than a required percentage of its value.
Declarations page
The summary page of a policy showing the insured, coverages, limits, deductibles and premium.
Double net (NN) lease
A lease in which the tenant pays two of the three nets, commonly property taxes and insurance, while the landlord handles structure and roof. Definitions vary by lease.
Force-placed insurance
Coverage bought by a landlord or lender, and charged to the tenant or borrower, when required insurance lapses. It is usually narrower and more expensive than a normal policy.
Gross lease
A lease in which the landlord pays property expenses, including insurance, from the rent.
Ground lease
A lease of land to a tenant who owns or builds the improvements on it. The ground tenant usually insures the building.
Insured value
The amount of property coverage on a building, normally based on replacement cost.
Landlord's liability (lessor's risk) policy
A liability policy written for an owner who leases a building to others, covering the owner's own exposure.
Loss payee
A party that receives claim payments for damage to property as its interest appears, such as a lender or ground lessor.
Mortgagee
A lender with a mortgage on the property, named on the property policy so it is paid on a building loss and notified of cancellation.
Named insured
The party the policy is issued to. For an owner, this is typically the entity that owns the building.
Net lease (NNN)
A lease in which the tenant pays property taxes, insurance and maintenance in addition to rent. In a triple net (NNN) lease the tenant typically pays all three.
Ordinance or law coverage
Coverage for the extra cost of rebuilding to current building codes after a covered loss.
Policy year
The period a policy covers, set by the carrier. It often differs from the lease year and the accounting year.
Pro rata
Divided in proportion, for example by days for a partial period or by insured value across buildings.
Replacement cost
The cost to rebuild or replace property with similar materials, without deduction for depreciation.
Reconciliation (true-up)
The year-end comparison of estimated payments to actual costs, with a refund or additional bill for the difference.
Rent abatement
A lease provision reducing or suspending rent while a building cannot be used after a loss.
Total insured value (TIV)
The total value insured across a building or schedule, including building, contents and business income.
Umbrella (excess) liability
Extra liability limits above a primary liability policy.
Vacancy provision
A policy condition limiting coverage when a building is vacant. Many policies treat a building as vacant unless a minimum share of its space is rented and used, often 31%, and restrict coverage after about 60 days.
Waiver of subrogation
An agreement by an insurer not to pursue the other party for amounts it paid, often required between landlord and tenant by the lease.
Wind and hail deductible
A separate deductible for wind or hail losses, often a percentage of the building's insured value.
This glossary is general education, not insurance or legal advice. Definitions vary by lease and policy.