Florida’s commercial property insurance market has changed significantly in recent years, and those changes are showing up directly in lease negotiations — not just in the insurance policies themselves. Tenants and landlords negotiating leases today need to account for insurance cost volatility in ways that weren’t as pressing a few years ago.
Why Florida Insurance Costs Have Risen
A combination of factors — increased hurricane exposure, reinsurance market pressures, litigation costs, and insurer withdrawals from the Florida market — has driven commercial property insurance premiums up significantly across the state, with South Florida coastal properties often seeing the sharpest increases.
How This Shows Up in Commercial Leases
CAM charge increases. For tenants paying CAM charges that include a pro-rata share of the landlord’s property insurance, rising premiums translate directly into higher pass-through costs — sometimes substantially higher year-over-year, catching tenants off guard if their CAM cap doesn’t account for insurance volatility.
Insurance requirements on tenants. Landlords are increasingly requiring higher tenant liability insurance limits, and in some cases requiring tenants to name the landlord and lender as additional insureds with specific, detailed coverage requirements that go beyond what was standard even a few years ago.
Negotiating insurance caps or carve-outs. Some tenants are now negotiating for insurance costs to be excluded from, or capped separately within, an overall CAM cap — treating insurance as a distinct, more volatile category rather than lumping it in with more predictable operating expenses like landscaping or common-area maintenance.
What Tenants Should Ask Before Signing
- Whether insurance costs are included within a CAM cap, or pass through uncapped
- The landlord’s recent insurance cost history, to understand the trend rather than just the current premium
- Whether the lease allows the landlord to pass through increased deductibles (many Florida property policies now carry substantial hurricane deductibles) in addition to premium increases
Impact on New Development and Buildout Decisions
Rising insurance costs are also affecting decisions around tenant improvement allowances and buildout standards, as landlords weigh insurance implications of certain construction types and tenant uses more heavily than in the past.
Why This Is a Negotiation Point, Not Just a Market Fact
Because insurance cost increases are often unpredictable and can be substantial, tenants have a real interest in negotiating specific protections — caps, exclusions, or advance notice requirements — rather than accepting open-ended pass-through language. This is a meaningfully different negotiating environment than existed even five years ago, and lease language that was standard then may no longer adequately protect a tenant now.
Negotiating a commercial lease in today’s Florida insurance environment? Brent A. Levison, P.A. helps tenants and landlords structure lease terms that account for current market realities. Contact the firm today for a consultation.
The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.