What a Tenant Is Actually Paying For

The name refers to the three "nets": property taxes, insurance, and maintenance/common area costs, all paid by the tenant in addition to base rent. This is common in single-tenant retail, restaurant, and industrial spaces, where the landlord wants a predictable return without operating expense risk.

• Net 1: property taxes
• Net 2: building insurance premiums
• Net 3: maintenance, repairs, and common area upkeep

Because the tenant is paying the insurance cost, the lease will usually specify exactly what policy types, limits, and named-insured language are required.

How This Shapes the Insurance Requirement

Landlords under a triple net lease almost always require the tenant to name the landlord as an additional insured on the tenant's general liability policy, and often require the tenant to insure the building itself (not just contents) up to full replacement value. A business signing a triple net lease without checking the insurance clause first can end up needing much higher limits, a waiver of subrogation, or specific endorsements they didn't budget for.

Why This Matters for Coverage and Cost

Getting the insurance side wrong on an NNN lease has real consequences: if a tenant carries limits below what the lease requires, the landlord can typically demand the tenant cure the gap or even treat it as a lease default. On the other end, some tenants over-insure the building structure when the landlord's own policy already covers it, duplicating premium unnecessarily. Reading the actual lease clause, not just assuming standard coverage applies, is the difference between a compliant policy and a costly gap.