How to Set Vendor & Tenant Insurance Requirements

Why Insurance Requirements Matter

Every vendor working on your property and every tenant occupying your space should carry insurance that protects both them and you. But "carry insurance" is vague. The question property managers actually need to answer is: what specific coverage types, limits, and endorsements should I require?

Getting this wrong creates real exposure. Require too little and you are unprotected when something goes wrong — and the costs can be substantial. Require too much and you will struggle to attract vendors and tenants. The goal is to set requirements that are proportional to the risk each party brings to your property.

This guide walks through how to set up insurance requirements that protect your properties without overcomplicating the process.

The Core Coverage Types

Four coverage types form the foundation of most commercial real estate insurance requirements.

General Liability (GL)

General liability is the baseline. It covers third-party bodily injury, property damage, and personal injury claims. Every vendor and tenant should carry it. For commercial properties, typical minimum limits are:

• $1,000,000 per occurrence for most vendors and tenants
• $2,000,000 general aggregate (the maximum the policy will pay in a policy period)
• Higher-risk vendors like general contractors or roofing companies may warrant $2,000,000 per occurrence

Workers' Compensation

Any vendor with employees working on your property should carry workers' compensation insurance. This is not optional — it is required by law in nearly every state. If a vendor's employee is injured on your property and the vendor lacks workers' comp, you may be liable for medical costs and lost wages.

Require statutory limits (which match your state's requirements) plus employer's liability coverage of at least $500,000 per accident.

Commercial Auto Liability

If a vendor drives vehicles onto your property — delivery trucks, service vans, construction equipment — require commercial auto liability. A minimum of $1,000,000 combined single limit is standard for most commercial property operations.

This one is frequently overlooked. A landscaping company's truck that damages a tenant's vehicle in your parking lot is your problem if the vendor lacks auto coverage.

Umbrella / Excess Liability

An umbrella policy provides additional limits above the primary general liability, auto, and employer's liability policies. For higher-risk vendors — general contractors, mechanical contractors, security companies — require an umbrella of at least $1,000,000 to $5,000,000 depending on the scope of work.

For tenants, umbrella requirements typically apply only to those operating businesses with significant foot traffic or physical risk, like restaurants, fitness centers, or medical offices.

Vendor vs. Tenant Requirements: Key Differences

Vendor and tenant insurance requirements serve the same purpose — protecting the property owner — but they differ in scope and emphasis.

Vendors are typically on-site performing work. Their requirements should be tailored to the type of work:

• A janitorial service needs GL and workers' comp
• An elevator maintenance company needs GL, workers' comp, auto, and possibly an umbrella
• A general contractor performing a buildout needs all four coverage types with higher limits

Tenants occupy space and operate businesses. Their requirements focus on:

• GL coverage appropriate to their business type (a law firm needs less than a restaurant)
• Workers' comp if they have employees on-site
• Property insurance for their own contents (not your building, but their improvements and personal property)
• Business auto only if they operate vehicles from the premises

The key difference: vendor requirements are driven by the work being performed, while tenant requirements are driven by the business being operated.

Why Templates Beat Ad Hoc Requirements

If you are setting insurance requirements individually for each vendor or tenant, you are creating inconsistency and wasting time. Two vendors performing identical work should have identical requirements. Two retail tenants of similar size should meet the same thresholds.

Requirement templates solve this by defining standard insurance requirements for categories of vendors and tenants:

• General contractor template: $2M GL, statutory workers' comp, $1M auto, $5M umbrella
• Professional services vendor template: $1M GL, statutory workers' comp
• Retail tenant template: $1M GL, statutory workers' comp, $1M umbrella
• Restaurant tenant template: $2M GL, statutory workers' comp, $1M auto, $2M umbrella, liquor liability

When you onboard a new vendor or tenant, you assign the appropriate template rather than deciding requirements from scratch. This ensures consistency across your portfolio and makes compliance checking straightforward — either they meet the template or they do not.

SmartCOI lets you create requirement templates and assign them to vendors and tenants, so compliance is checked automatically every time a new COI is uploaded.

Certificate Holder and Additional Insured: Why They Matter

Two endorsements appear on nearly every COI requirement list, and property managers sometimes confuse them.

Certificate Holder

The certificate holder is the party receiving the COI for informational purposes. Being listed as the certificate holder means you get notified if the policy is cancelled. It does not give you any rights under the policy.

Additional Insured

Being named as an additional insured on a vendor's or tenant's policy gives your organization coverage under their policy. If someone sues both the vendor and the property owner over an incident, the vendor's insurance defends and indemnifies you as well.

This is the one that matters most. Always require that your entity — using the exact legal name — is listed as an additional insured on the vendor's or tenant's general liability policy. Verify the wording on every COI. A common problem is when the COI lists "additional insured per attached endorsement" but the actual endorsement is never provided or uses blanket language that may not hold up in a claim.

Getting the Entity Name Right

The additional insured and certificate holder should list your exact legal entity name. "ABC Properties" is not the same as "ABC Properties LLC" or "ABC Property Management, Inc." A mismatch can create coverage disputes during claims. Standardize the entity names you require and check every certificate against them.

Setting Limits: A Practical Framework

If you are unsure where to set your limits, use this framework:

1. Check your own insurance carrier's requirements. Many property insurance policies require that vendors carry minimum limits. Start there.
2. Review your loan documents. Lenders often specify minimum insurance requirements for third parties working on the property.
3. Match the risk to the work. Higher-risk activities (construction, hot work, heavy equipment) warrant higher limits. Lower-risk activities (consulting, IT services) can have lower thresholds.
4. Benchmark against your market. Talk to your insurance broker about what other commercial properties in your market require. Standards vary by region and property type.
5. When in doubt, require $1M/$2M GL. This is the most common baseline in commercial real estate and most established vendors already carry it.

Putting It Into Practice

Here is how to implement this today:

1. Audit your current requirements. Are they documented? Consistent? Or scattered across individual contracts with different numbers?
2. Create 3-5 templates covering your most common vendor and tenant types.
3. Standardize your entity names for certificate holder and additional insured fields.
4. Communicate requirements upfront — include them in your vendor agreements and lease exhibits so there are no surprises.
5. Track compliance systematically rather than checking certificates only when they arrive. Consider building a formal COI compliance policy to ensure consistency.

Setting clear, consistent insurance requirements is the foundation of COI compliance. Everything else — collection, verification, follow-up — depends on knowing what you actually require.

Ready to standardize your insurance requirements and automate compliance tracking? Start a free trial of SmartCOI and set up your first requirement templates in minutes.