Indemnity Cap Impact Calculator

Indemnity caps limit tenant exposure. This calculator sizes landlord gap.

Expected claim value

Indemnity cap

Claim probability %

Probability-weighted gap

$60,000

Gap if claim occurs

$1,500,000

Coverage % of claim

57.14%

How the math works

Gap if claim = expected − cap. Probability-weighted gap = gap × claim probability.

On $3.5M expected claim with $2M cap at 4% probability: $60k expected landlord exposure. Pay $1-3k for umbrella coverage to close the gap — positive ROI on catastrophic coverage. Sophisticated risk management requires stacking layers to close known gaps.

How to Use

Enter expected claim value.
Enter indemnity cap amount.
Enter claim probability %.
Read probability-weighted gap.

Frequently Asked Questions

What's indemnity?

Tenant agrees to defend and hold harmless landlord against claims arising from tenant's operations. E.g., visitor slips in tenant space; tenant indemnifies landlord from that claim. Standard tenant obligation.

Cap structure?

Tenant negotiates cap: e.g., $1-5M, or tenant's insurance limits. Landlord exposure above cap. Sophisticated landlord: no cap on gross negligence or willful misconduct, capped on ordinary negligence. Tightly drafted.

Typical limits?

Small retail: $1M indemnity cap (tenant's $1M liability policy). Office: $2-5M. Large industrial: $10M+. Above cap: landlord insurance kicks in (landlord's umbrella). Gap between cap and landlord coverage = exposure.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.