If you have a net lease and the tenant pays outgoings this does not give them the right to arrange your insurances. It simply means they need to fund the reasonable costs of insuring the property. If you allow a tenant to arrange building insurance, quite obviously his risk appetite is different to yours. It may well be that your tenant sees this as an opportunity to reduce costs at your expense. Your investment is an asset that requires protecting and to hand over the keys to protecting your asset (to someone who also has to pay the invoice) is fraught with danger. Take home message- a legal requirement to pay for your insurance does not transfer a right to the tenant to arrange the insurance. You ought to and are entitled to maintain the integrity of your insurance protection.
NOTE WELL: This is subject of course to your lease being structured correctly and allowing this to occur.
Gross Leases can also be problematic if you haven’t allowed for adequate recovery provisions where the tenants business activities create increased premiums or restricted terms and conditions.