Lenders & Contracts · Insurance Term
Triple Net Lease (NNN Lease)
Definition
A triple net (NNN) lease is a commercial lease where the tenant pays rent plus its share of property taxes, insurance and maintenance. The owner may still buy the building insurance and bill it back, so the lease must say clearly who insures what.
In Plain English
In many NNN leases, the owner buys property insurance on the building and passes the cost to tenants. In others, especially single-tenant leases, the tenant buys the building policy and names the owner. Both setups are common.
The owner should still carry liability coverage. A lessor's risk only policy is a common way to insure an owner whose tenants run the business on site.
Strong lease insurance requirements cover the tenant's liability limits, additional insured status, waivers of subrogation and loss of rents if the building is damaged.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: a single-tenant pharmacy building is leased NNN. The lease requires the tenant to insure the building at replacement cost, name the owner as additional insured and loss payee, and carry $2 million of liability. The owner keeps a lessor's risk policy for its own exposure.
What to Watch For
- Read who must insure the building and in what amount.
- Collect certificates and endorsements from tenants every year.
- Make sure rent loss or business income is covered by someone.
- Check how deductibles, including wind and hail, are shared.
Last updated October 14, 2026 · Primesure editorial team · How We Write