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Key Takeaways

LRO insurance can help protect you from bodily injury or property damage lawsuits from your tenants or their employees.
Doesn't cover property damage to the commercial building you own.
This coverage is also known as landlord insurance.

storefront of a small business protected by Lessor's Risk Only

What Is a Lessor’s Risk Policy?

A lessor’s risk only (LRO) insurance policy is a type of commercial property insurance designed to help protect landlords who rent out commercial properties. If you own apartment buildings, commercial buildings, retail malls, warehouses or office spaces, LRO insurance helps cover bodily injury and property damage lawsuits from tenants or their employees.

What Does Lessor’s Risk Only Cover?

Lessor’s risk only (LRO) insurance, also known as landlord insurance, helps cover property landlords if you’re sued by a tenant or their employees for property damage or bodily injury. This coverage can also help pay for your legal fees related to a tenant lawsuit. LRO insurance typically covers damages related to the following claims scenarios filed by a tenant or their employee:

Slips, trips and falls
Fire and smoke damage
Weather damage from wind, hail, snow and ice
Water damage from burst pipes or sewer backup
Theft or vandalism
Vehicle accidents at the property

What Is Not Covered Under LRO Insurance?

Lessor’s risk only insurance (LRO) doesn’t cover your tenant’s business property, like office furniture, equipment, computers, supplies or inventory from property damage. It also doesn’t cover property damage claims related to the building you own. You’ll need additional insurance coverages, like commercial property insurance, to help protect your physical property from fire, theft, vandalism and other covered losses. Your tenants can also benefit from having business property insurance to help protect their physical assets that they keep within their rented space.

What Is the Difference Between Lessor’s Risk Only Insurance and General Liability Insurance?

Lessor’s risk only insurance helps protect landlords against claims from the tenant(s) at your owned commercial property. General liability insurance (GLI) only covers claims related to the general public, like customers or clients who visit your business. GLI helps cover claims that a business caused bodily injury or property damage to a third party. Some commercial landlords require their tenants to have general liability insurance to help cover claims if a customer is injured or their personal property is damaged while visiting your tenant’s space.

Remember:

Lessor's risk only insurance doesn't cover property damage to the building you own. You'll need commercial property insurance to cover these kinds of claims.

Cost of LRO Insurance

Customers of The Hartford pay an average of $1,972 a year, or about $164 a month, for lessor's risk only insurance.** Keep in mind that your cost for LRO insurance may be higher or lower than that amount. Insurance companies consider several factors when determining your insurance cost, like your building’s:

Location: If your business is located in a populated area that has higher risk for crime or vandalism, you may pay a higher rate.
Construction: Materials used in the construction of your business can impact your commercial insurance cost. For example, buildings made from fire-resistant materials will typically cost less to insure.
Occupancy rate: Businesses with larger amounts of people consistently on the premises may see higher insurance costs.
Fire and threat protection: Installing safety features like smoke detectors and burglar alarms at your business may help lower your rate.

The best way to find out how much LRO insurance will cost your business is to get a quote.

Who Needs Lessor’s Risk Insurance?

Any commercial property owner should consider having lessor’s risk insurance. Without it, you could be financially impacted by a costly claim or lawsuit from a tenant. Keep in mind that some lenders may require you to have this insurance as a part of your contract for any commercial real estate loans. Be sure to check your contracts and state laws to find out if you’re required to have this coverage.

Frequently Asked Questions About LRO Insurance

What Is an Example of LRO Insurance?

For example, a pipe bursts on a cold night and damages the office space that’s leased by a tenant. LRO insurance can help cover the tenant’s property damage and help pay for the costs of repairs. If the tenant had a customer’s property in their care at their leased space, general liability insurance could help cover the cost of damages to the customer’s property.

What Is LRO Exposure?

Lessor’s risk insurance only helps protect the property owner if a tenant files a lawsuit against the landlord due to a bodily injury or property damage. Without LRO insurance, you might have to pay out of pocket for costly tenant lawsuits that could come up unexpectedly. Keep in mind that LRO insurance doesn’t cover the building itself from physical damage caused by fire, theft, vandalism and other covered losses. You’ll need commercial property insurance to make sure your building is fully protected.

What Is the Lessor's Risk Classification?

Lessor’s risk only insurance is specifically designed to fit the needs of commercial property owners or landlords. The properties can include retail buildings or malls, office spaces, warehouses, apartment buildings and other commercial building types.

Does Lessor’s Risk Only Insurance Cover Property Damage?

Lessor’s risk only insurance doesn’t cover property damage claims. LRO insurance only helps protect the commercial property owner from claims or lawsuits from their tenants. To more fully protect your owned building(s), a Business Owner’s Policy (BOP) can help, because commercial property coverage is included. A BOP can help cover claims resulting from fire, theft, bodily injury and advertising injury.

A licensed insurance agent can help you find the commercial property insurance coverage you’re looking for. Find an agent today to get a quote for a lessor’s risk only insurance from The Hartford.

How Much Does Commercial Property Insurance Cost?

What Is Commercial Casualty Insurance?

Types of Commercial Property Insurance

** Costs, premiums, and coverages mentioned are estimates and are not guaranteed. Actual cost, premium, and coverage are determined at the time of quote or issue and are specific to an individual risk. Premiums are based on information provided to The Hartford, including, but not limited to, underwriting and rating criteria. All examples included on this website or in an advertisement are intended for informational purposes only and are not an offer or a guarantee of premium or coverage. Coverage and products described are subject to the terms and conditions found in the policy contract. Any educational information provided about available coverages does not modify the policy language or imply that any claim is covered. Products are not available in all states or for all businesses.

Lessor's Risk Only Insurance

What Is a Lessor's Risk Policy?