Property Damage:
Protection for the physical structure against fire, wind, theft, vandalism, and loss of rents.
What is Lessor’s Risk Insurance?
At its core, a lessor’s risk only (LRO) insurance policy is a type of commercial property and liability insurance designed to help landlords who rent out commercial buildings.
If you own a building and lease out most or all of the space, you face a unique set of exposures. Unlike an owner occupied structure, a lessors risk takes into consideration that it is occupied by someone other than the owner, therefore the cost and structure of a lessors risk policy differs from an owner occupied only policy.
Why It Matters
When you aren’t the primary occupant of your building, you lose a degree of control over daily operations. You are taking on the risk of various businesses you rent to, along with their customers coming on the premises. You also have the issue of loss of rents if the structure becomes unusable due to a loss. Lessors risk insurance acts as your financial shield against:
Liability Claims:
Coverage if a tenant, a tenant’s customer, or a passerby is injured on your property (e.g., slip and fall in common area).
Legal Defense:
Support for legal fees and settlements arising from lawsuits related to property maintenance or accidents.
Key Features of a Lessor’s Risk Policy
| Feature | Description |
|---|---|
| Comprehensive General Liability | Protects you from third-party lawsuits occurring on the premises. |
| Building Property Coverage | Insures the actual structure and any business personal property you own on-site. |
| Business Income Protection | Covers lost rental income if a covered loss (like a fire) makes the building uninhabitable. |
| Medical Payments | Provides quick coverage for minor injuries sustained by others on the property. |
Is Lessor’s Risk Right for You?
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