What is lessor's risk only insurance?

It is liability coverage for owners who lease commercial property to tenants. It protects you against third-party claims, a customer or visitor injured on the premises, or their property damaged, arising from a building you own and rent out. The Hartford and other carriers position it as landlord-focused liability, distinct from the property coverage on your building.

How is LRO different from commercial property insurance?

Property insurance covers physical damage to your building and contents. LRO covers your liability when someone else is injured or their property is damaged on your premises. One protects the asset, the other protects you from being sued over a condition of the property. A leased commercial building generally needs both.

Do I still need LRO if my tenants carry their own insurance?

Usually yes. Tenant insurance and lease risk transfer reduce your exposure, but they do not eliminate it, and they only work if the lease language and the certificates are actually in force. LRO is your own coverage for claims that reach the owner, including common areas and conditions the tenant does not control. The two work together; one does not replace the other.

Should I add an umbrella over my LRO?

Often yes. A single severe injury claim can exceed a standard liability limit, especially in retail, mixed-use, or high-traffic buildings. A commercial umbrella adds a large, relatively inexpensive layer of liability capacity above the LRO. If foot traffic, tenant concentration, or contractual indemnity make a large claim plausible, the umbrella is usually worth it.

Lessor's Risk Insurance (LRO) - Vantage Point Risk

Lessor's risk: liability built for owners who lease.

Lessor's risk only, or LRO, is the liability coverage built for an owner who leases space to tenants. It protects you when a tenant, customer, or visitor is injured on the property or their property is damaged, the exposure your building coverage does not touch.

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LRO covers third-party bodily injury and property-damage claims tied to a property you own and lease out. The common and costly misconception is that liability protects the building. It does not. Your property policy protects the building as an asset; LRO protects you when someone else gets hurt or sues over a condition of the premises. For a tenant-occupied building, both are essential, and they do different jobs.

Why your property policy is not enough

Property coverage pays to repair your building after a covered loss. It does nothing for a slip-and-fall in the common area, a tenant injured by a maintenance failure, or a lawsuit alleging the premises were unsafe. Those are liability claims, and on a leased building they are constant. LRO is the coverage that responds, and the limit needs to reflect the foot traffic, the tenant mix, and the asset at stake.

How leases and risk transfer fit

Your lease should push much of the tenant-side risk back to the tenant through insurance requirements, additional insured status, and a waiver of subrogation. But a lease only works if the transfer is real and enforceable, and many are not. LRO is your backstop for the gaps the lease leaves open, and reviewing the two together is where the real protection comes from.

When it becomes decisive

LRO matters in any tenant-occupied property, and it becomes critical in customer-facing retail, mixed-use, and high-traffic buildings. The more people move through the property and the more tenants you carry, the larger the liability exposure, and the more an umbrella over the LRO is worth carrying.

Lessor's risk: liability built for owners who lease.

Why your property policy is not enough

How leases and risk transfer fit

When it becomes decisive

Lessor's risk insurance, answered.

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Lessor's risk: liability built for owners who lease.