Commercial · coverage line
Rental property.
Lessor's Risk Only is the property and liability form for owners who lease a commercial building to a tenant. It covers the structure on a special-form commercial property policy, premises liability for incidents on the property, and loss of rents when an insured loss interrupts the lease. The tenant's own business personal property, inventory, and operations are not on this form. They sit on the tenant's own policy. Reading the lease alongside the form is the work that gets this right.
What it is.
Lessor's Risk Only is the commercial property + liability form for owners who lease their building to someone else. It covers the structure, premises liability for incidents on the property, and the rents you'd lose if a covered loss makes the building uninhabitable. What it doesn't cover is anything the tenant brings into the space, their inventory, equipment, and operations sit on the tenant's own policy. Reading the lease alongside the form is the work that gets this right.
The lines in your policy.
Each one is its own knob. The carrier's default rarely fits a real life.
What a claim looks like.
Three anonymized files. Numbers are illustrative.
Hailstorm damages the roof of a leased retail strip. Repairs take four months. The property form pays $42K to replace the roof; loss-of-rents pays the four months of rent the landlord would have collected ($18K). Tenants' inventory damage is on their own policies, not the landlord's claim.
Customer at a leased coffee shop falls on icy entry steps the landlord is responsible for clearing under the lease. Files claim against the landlord. Premises liability defends and settles for $36K. The tenant's GL doesn't apply, the condition was on the landlord's side of the lease.
Tenant moves out December 1; landlord hasn't re-leased or notified the carrier. February pipe burst floods the property, claim filed at day 75 of vacancy. Policy's vacancy clause voids the claim. The fix would have been a 30-day vacancy permit at $0-$200 in premium charged at notification.
How to read a rental property policy.
The four things worth looking for on the dec page, in the order we read them.
The first page tells you who's actually covered, on what address, and under whose legal entity. A surprising number of policies have the wrong name, the wrong address, or a missing additional insured, and you don't find out until you file a claim. Cross-check it against your driver's license, your title or lease, and any contract that requires you to be insured.
Policy limits are abstract until you stack them against the assets they protect. A $300k liability limit feels generous in isolation; against a $1.2M home and a college fund, it isn't. Walk down each numbered line on your dec page and ask: if this were the cap on the worst day, would I be okay?
Page one shows you the base form. Pages four through twelve show you what the endorsements added, and, more importantly, what they took away. Water-damage exclusions, roof-payment schedules, named-storm deductibles, scheduled-valuables caps. These small numbered forms decide more claims than the headline limits do.
Carriers re-rate, re-form, and re-endorse policies at every renewal. If you keep last year's dec page, a side-by-side read takes ten minutes and tells you which limits drifted, which sublimits got cut, and which endorsements quietly disappeared. It's the single most useful habit in personal insurance.
Frequently asked questions.
Why does my insurance need to be different now that I'm leasing the building?
When you occupied the building yourself, your commercial property policy covered the structure, your liability, and your business personal property all in one place. Once you lease the space to someone else, the exposure changes, your business isn't there anymore, but the building still is, and a tenant's customers are now walking through. Lessor's Risk Only is the form that fits the new shape: structure + premises liability + loss of rents, with no business personal property because none of it is yours.
What's the difference between LRO and a regular commercial property policy?
Lessor's Risk Only is a class of business under commercial property, same underlying ISO form, different classification because the building is leased to a third party rather than owner-occupied. Premium is usually lower (no business personal property to cover), but the carrier asks more about the tenant's operations and reviews the lease. Some carriers won't write certain tenant classes (cannabis, gun shops, high-hazard manufacturing); placement varies by tenant.
Who covers what, me as landlord, or the tenant?
Read the lease first. Standard split: landlord covers the structure (LRO), the tenant covers their own business personal property + their operations liability (BOP or property + GL). Tenant improvements are a gray zone, by default they're not on the landlord's policy unless scheduled, and they're often not on the tenant's either. Endorse them somewhere or you have a coverage gap at loss time.
What's a vacancy permit and when do I need one?
Most LRO policies suspend or limit coverage after 60-90 days of unoccupied vacancy. A vacancy permit is an endorsement the carrier issues that maintains coverage during a known vacancy, usually for a fixed term (60-180 days) for a nominal premium. If your tenant moves out and you don't expect to re-lease within the vacancy window, file for a permit. Cheap to add; expensive to skip.
What about loss-of-rents, how long does it pay?
Standard forms pay 12 months of rents from the date of loss; longer periods (18, 24, 36 months) available by endorsement for larger structures or harder-to-replace properties. Pays the rental income you would have received, minus expenses you don't have to pay during the closure period. The carrier's actual-loss-sustained calculation isn't always intuitive, keep the lease and rent roll handy at claim time.
Does the policy follow the tenant or the property?
The property. LRO is the landlord's policy on the building and the address, not on a specific tenant. When tenants change, you notify the carrier (and may need to re-rate based on the new tenant's class of business), but the policy continues.
Want a second read on your rental property policy?
Send us your declarations page. You'll get it back marked up, in plain language, with the gaps and the over-coverage flagged, yours to keep, no obligation to switch.
or phone (913) 408-7280
We're an independent broker. We represent you, not the carrier , paid by the carrier we ultimately place with, but accountable only to the person whose name is on the policy. Read more about how we work.