Keeping the operating costs that you pass through to tenants low gives your shopping center or office building a competitive edge. So, to keep insurance costs low while making sure that you have adequate coverage, consider a policy with low premiums and a high deductible. But if you pass through a portion or all of those low premiums to tenants, you should negotiate the right to pass through a portion or all of the high deductible as well.

If your lease requires the tenant to give you proof that it has the necessary insurance policies, don't accept the tenant's proof by fax. That's because it's easy for an unscrupulous tenant to “create” the required proof by cutting and pasting documents together, then send it to you by fax so you can't tell that it's falsified.

To protect yourself, require the tenant to send you the original insurance form and endorsements. If you must accept copies, require that they be certified by the insurer—not photocopies.