Before you read
Test yourself first: 5 questions
Question 1 of 5
An apartment tenant pays $1,200 per month and the landlord pays for property taxes, insurance, and building maintenance. What kind of lease is this?
Answer: B. Because the tenant pays a flat rent and the landlord covers the operating expenses, this is a gross lease, the form typical of residential rentals.
Question 2 of 5
Purchasing an insurance policy to protect against a possible loss is an example of which risk-management strategy?
Answer: B. Buying insurance transfers the financial consequences of a loss to the insurer, which is the risk-transfer technique.
Question 3 of 5
Private mortgage insurance (PMI) on a conventional loan is generally required when the loan-to-value ratio exceeds:
Answer: D. Lenders typically require PMI on conventional loans when the LTV is above 80% (down payment less than 20%) to protect against default risk.
Question 4 of 5
A brokerage carries errors and omissions (E&O) insurance. As a risk-management strategy, E&O insurance is an example of which technique?
Answer: B. Buying insurance is a risk-transfer technique because it shifts the financial burden of certain losses to the insurer rather than the brokerage absorbing them directly.
Question 5 of 5
In a triple-net (NNN) lease, the tenant pays:
Answer: A. In a triple-net lease the tenant covers the 'three nets' — taxes, insurance, and maintenance — on top of base rent. Common in commercial leasing.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
Tenants need RENTERS insurance for their contents and personal liability — the landlord's policy never covers a tenant's couch, a fact managers should put in the lease. Commercial leases allocate risk with indemnification (hold-harmless) clauses and require certificates of insurance from tenants and vendors. Risk management beyond insurance: avoid (close the pool), control (fence and self-latching gate), transfer (insurance/indemnity), or retain (deductibles) — the classic four responses.
Risk & Insurance for Rentals: FAQs
Is Risk & Insurance for Rentals on the real estate exam?
Yes. Leasing & Property Management is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
