Besides property insurance, what other insurance is the lessee typically required to carry?

• A. Liability insurance.
• B. Flood insurance.
• C. Life insurance.
• D. Health insurance.

Answer: (A)

The main idea is risk management in a lease. While property insurance covers the building and improvements, the lessee is typically required to carry liability insurance to protect the landlord from claims that could arise from injuries or property damage caused by the tenant’s use of the space. This shifts the financial risk away from the landlord if someone is injured on the premises or if the tenant’s activities cause damage to others. Flood insurance, life insurance, and health insurance aren’t standard lease requirements because they address different risks or personal needs, whereas liability coverage directly mitigates the kind of third-party claims most common in leased properties. In many leases, the landlord also requires the policy to name them as an additional insured and to provide proof of coverage.