Start with the coverage parts, not the LRO label
Lessor's risk only insurance is marketed to commercial property owners who rent buildings to tenants. The phrase appears on proposals from multiple carriers, but the included coverage parts are not standardized.[1][2]
The Hartford describes its LRO coverage as protection against covered bodily-injury or property-damage lawsuits brought by tenants or their employees, including related legal fees. The same page says its LRO product does not cover physical damage to the owner's building or the tenant's business property and directs the owner to separate commercial property coverage for the building.[1]
Selective describes its lessors-risk offering differently. Its product page lists property insurance for buildings and structures, liability insurance for specified bodily-injury and third-party property-damage obligations, and business-interruption protection for business-income loss after direct physical loss of or damage to certain property.[2]
Travelers separates LRO classifications by tenant use—office, retail, shopping center, restaurant, religious, garage or gas station, and manufacturing or processing—and applies program-specific restrictions for tenant occupancy, mixed use, building age, building systems, and life-safety features.[6]
- Premises liability under an LRO policy
The Hartford describes its LRO coverage as protection against covered bodily-injury or property-damage lawsuits brought by tenants or their employees, including legal fees. Selective lists liability insurance for specified bodily-injury and third-party property-damage obligations in its lessors-risk package.[1][2]
Review: Compare the liability limits, covered-claim definitions, and any exclusions on the declarations page of each proposal.
- Building property coverage
Selective includes property insurance for buildings and structures in its lessors-risk package. The Hartford's LRO product does not cover physical damage to the owner's building and directs the owner to a separate commercial property policy.[1][2]
Review: Check whether the proposal includes building coverage or requires a separate policy. Verify the valuation basis, covered causes of loss, and deductible on the declarations page and coverage forms.
Separate the owner's building, liability, and tenant risks
As a lessor you face three distinct insurance decisions: protecting the physical building you own, covering your premises liability exposure, and confirming that your tenants carry their own property and liability insurance.[1][2][3]
Whether building coverage sits inside the LRO proposal or requires a separate policy depends on the carrier. Selective includes it; The Hartford does not. Either way, you need to confirm the valuation basis, covered causes of loss, and deductible in the issued forms.[1][2]
Travelers tells commercial tenants that their own property insurance protects tenant-owned equipment, inventory, and furnishings, while landlord insurance typically protects the building rather than the tenant's property.[3]
Travelers' lease guide says commercial leases commonly address general-liability limits, whether the landlord must be named as an additional insured, and proof of insurance before move-in. These are lease-specific considerations—the signed lease and issued policies control what each party must carry.[3]
| Risk | Typically the owner's policy | Typically the tenant's policy |
|---|---|---|
| Building structure and systems | Yes | No |
| Owner's premises liability | Yes | No |
| Tenant-owned equipment, inventory, furnishings | No | Yes |
| Tenant's business operations liability | No | Yes |
| Additional-insured status for landlord | Confirmed on tenant's policy per lease | Issued by tenant's carrier |
Based on Travelers lease guide and Hartford and Selective LRO descriptions. The signed lease and issued policies control.[1][2][3]
Coverage questions in this guide
A shared record keeps related coverage questions in one place.
- Premises liability
The Hartford describes its LRO coverage as protection against covered bodily-injury or property-damage lawsuits brought by tenants or their employees, including legal fees. Selective lists liability insurance for specified bodily-injury and third-party property-damage obligations in its lessors-risk package.[1][2]
Review: Compare the liability limits, covered-claim definitions, and any exclusions on the declarations page of each proposal.
- Building property coverage
Selective includes property insurance for buildings and structures in its lessors-risk package. The Hartford's LRO product does not cover the building and directs the owner to a separate commercial property policy.[1][2]
Review: Verify whether building coverage is in the LRO proposal or requires a separate policy. Check valuation basis, cause-of-loss form, and deductible on the declarations page.
- Business income or rental value
Selective lists business-income loss coverage triggered by direct physical loss of or damage to certain property. Travelers describes Business Income Rental Value as an optional coverage for continuing expenses and rental-property income after a covered loss. The issued policy controls the trigger, limit, and restoration period.[2][4]
Review: Confirm the covered-loss trigger, limit or coinsurance, waiting period, and maximum restoration period in the issued policy.
- Flood under the NFIP General Property Form
The NFIP General Property Form covers eligible commercial buildings and contents against flood with separate deductibles on an actual-cash-value basis. It does not cover business interruption or loss of use.[7]
Review: Determine flood-zone status and whether a lender requires flood coverage. Review the NFIP form's deductibles and excluded financial losses against your rental-income exposure.
Choose rental-income protection deliberately
Lost rent after a building loss is not automatically covered under every LRO proposal. Rental-income or business-income coverage requires an explicit covered-loss trigger, a stated limit or measurement method, and a defined restoration period. The issued policy controls each of these terms.[2][4]
Selective lists business-interruption protection as part of its lessors-risk package, covering business-income loss after direct physical loss of or damage to certain property. The issued policy controls which property and which causes of loss trigger the coverage.[2]
Travelers describes Business Income Rental Value coverage as protection for continuing expenses and rental-property income after a covered loss. It also lists Contingent Building coverage for a leased tenant's failure to provide adequate property insurance and Tenant Movement Expenses for moving tenants back after repairs. These are optional carrier coverage descriptions—the covered-loss trigger, limits, waiting period, restoration period, and issued endorsements control what is actually available.[4]
- Business income or rental value
Selective lists business-income loss coverage triggered by direct physical loss of or damage to certain property. Travelers describes Business Income Rental Value as an optional coverage for continuing expenses and rental-property income after a covered loss. Neither description establishes the limit, waiting period, or restoration period—those appear in the issued policy.[2][4]
Review: Confirm the covered-loss trigger matches the cause-of-loss form in your proposal. Verify the limit, any coinsurance or monthly limitation, waiting period, and maximum restoration period in the issued endorsement.
Check the occupancy and gaps before price
Carrier eligibility and available coverage depend on specific building and tenant facts. Two carrier examples show the range of underwriting questions you should expect.[5][6]
- USLI's all-states LRO application asks for each tenant's name, operations, and square footage; tenant insurance certificates and written leases; any owner occupancy; construction type, cause-of-loss form, deductible, protection class, stories, alarms, roof and building systems; building, business personal property, and business income limits and valuation; vacancy status; loss history; sprinklers; older wiring; and specified tenant operations.[5]
- Travelers separates LRO classifications by tenant use and applies program-specific restrictions for mixed commercial and apartment use, residential use, building age, occupancy percentage, building systems, life-safety features, and certain higher-hazard tenant operations. Vacant buildings or land are sent to a separate Northfield E&S path.[6]
- USLI limits its instant-quote path to accounts with no losses in the past three years.[5]
Flood is a separate coverage consideration. The NFIP General Property Form provides a flood-only policy for eligible commercial property, with building and contents purchased separately and separate deductibles. Covered building and contents losses under that form use actual cash value. The NFIP policy does not cover business interruption or loss of use.[7]
- Flood under the NFIP General Property Form
The NFIP General Property Form covers eligible commercial buildings and contents against flood with separate deductibles. Covered losses use actual cash value under that form. The policy does not cover business interruption or loss of use.[7]
Review: Determine whether your building is in a flood zone and whether a lender requires flood coverage. Review the NFIP form's deductibles, actual-cash-value basis, and excluded financial losses against your rental-income exposure.
Give each carrier the same complete submission
Carriers can request different information, but the USLI and Travelers examples show a useful baseline. Gathering these details before you request proposals helps you compare terms on equal footing.[5][6]
- Ownership entity, any owner operations, and any owner occupancy of the building.[5]
- Each tenant's name, operations, and occupied square footage.[5]
- Signed leases, tenant insurance certificates, additional-insured requirements, and indemnification terms.[5][3]
- Construction type, stories, roof age and material, building systems, sprinklers, alarms, protection class, and any older wiring.[5]
- Building value, business personal property value, and valuation basis (replacement cost or actual cash value).[5]
- Requested building, liability, business personal property, and rental-income limits and deductibles.[5]
- Vacancy status, occupancy percentage, and renovation status.[5][6]
- Loss history for the period each carrier requests. USLI limits its instant-quote path to accounts with no losses in the past three years.[5]
- Mortgagee or other insurable interests.[5]
- Tenant use classifications—office, retail, restaurant, shopping center, manufacturing, or other—since carriers such as Travelers apply different appetite rules by use.[6]
Property Covered is a property insurance marketplace operated by a licensed insurance producer with access to more than 400 carriers and market options. Licensed support is available by phone at (888) 693-8980 to help you compare available carrier terms. A quote request is free and carries no purchase obligation. Carriers make the final eligibility, pricing, binding, policy, and claims decisions.
Sources
- 1.The Hartford, Lessor's Risk Only Insurance
- 2.Selective Insurance, Insurance for Lessors Risk
- 3.Travelers, What Small Businesses Should Know Before Signing a Commercial Lease
- 4.Travelers, Real Estate Owners Insurance Coverages
- 5.United States Liability Insurance Company, Lessor's Risk Only Product Application - All States
- 6.Travelers, Select Business Appetite Guide
- 7.FEMA National Flood Insurance Program, Summary of Coverage: Commercial Property
Common questions
LRO stands for lessor's risk only. It is a label carriers use for insurance sold to commercial property owners who lease space to tenants. The coverage parts inside an LRO proposal vary by carrier—The Hartford describes its LRO as premises liability protection that does not cover the building, while Selective describes a lessors-risk offering that combines property and liability coverage and separately lists business-interruption protection. [1][2]
It depends on the carrier. The Hartford's LRO product does not cover physical damage to the owner's building and directs the owner to a separate commercial property policy. Selective combines property insurance for buildings and structures with liability insurance and separately lists business-interruption protection. Check the declarations page and coverage forms of each proposal. [1][2]
Not automatically. Selective lists business-interruption protection in its lessors-risk package, triggered by direct physical loss of or damage to certain property. Travelers describes Business Income Rental Value as an optional coverage for real-estate owners. The issued policy's cause-of-loss form, limit, and restoration period define what you recover. [2][4]
Each carrier can request different information. USLI's all-states LRO application asks for each tenant's name, operations, and square footage; tenant insurance certificates and written leases; any owner occupancy; construction, roof, sprinklers, alarms, and protection class; building and contents values with valuation basis; requested limits and deductibles; vacancy status; and loss history. Travelers applies separate appetite rules by tenant use classification, building age, occupancy percentage, and renovation status. USLI limits its instant-quote path to accounts with no losses in the past three years. [5][6]
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