Building property
The structure, roof, systems and common areas you retain responsibility for.
Business Insurance
Lessors risk for commercial landlords.
You own the building, someone else runs the business inside it. What your tenants do changes your risk more than the building does.
Lessors risk only, usually shortened to LRO, is written for owners who lease commercial premises to business tenants and have no operations of their own in the building. The distinctive feature is that your exposure is largely determined by activities you do not control — which is why underwriters spend more time on the tenant schedule than on the structure.
Your tenants are your rating
A unit let to an accountancy practice and one let to a welding shop are different risks in the same building. Restaurants with commercial cooking, trades using flammables and any tenant with a public-facing hazard all raise the profile of the whole property.
Keep the tenant schedule current and tell us when it changes. An unreported change of use is one of the more common causes of a coverage dispute on this class, and it is entirely avoidable.
Certificates and additional insured status
Every commercial lease should require the tenant to carry general liability, name you as additional insured, and provide a certificate before occupancy — then renew it annually. This is your first line of defence, and it works only if someone actually collects the certificates.
Waiver of subrogation clauses are also common in commercial leases. Where you agree to one it needs to be endorsed onto your own policy, because agreeing contractually without telling your insurer creates a problem at claim time.
What it covers
The parts of a lessors risk insurance policy
Premises liability
Injury in areas under your control — car parks, walkways, shared entrances.
Loss of rents
Rental income while units cannot be occupied after a covered loss.
Tenant certificates
Additional insured status and annual renewals collected from every tenant.
Wind and hail
Percentage deductibles, which on a commercial roof are substantial.
Equipment breakdown
Building systems — HVAC, boilers, lifts — failing mechanically.
Working with us
What we do differently
We are an independent agency, so we place your lessors risk insurance across several carriers rather than fitting you to one company's product. That means a genuine comparison, and someone to call who is not a call centre.
- Keep the tenant schedule current and report changes of use
- Collect certificates naming you as additional insured, and renew them annually
- Endorse any waiver of subrogation you agree to in a lease onto your own policy
- Set loss of rents against realistic re-letting as well as repair timelines
Common questions
Lessors Risk Insurance, answered
What does lessors risk only mean?
It describes cover for a property owner whose only activity at the location is leasing it to others. You have no operations in the building, so the policy is written around ownership and common areas rather than a business you run.
Why do underwriters ask about my tenants?
Because their activities drive your risk. A restaurant with commercial cooking or a workshop using flammables raises the profile of the whole property regardless of how well you maintain it.
Should I require tenants to name me as additional insured?
Yes, in every lease, with a certificate before occupancy and an annual renewal. It is the single most effective protection available to a commercial landlord, and it only works if the certificates are actually collected.
Do I insure the tenant's fit-out?
Normally not — improvements the tenant paid for are their responsibility. What matters is that the lease is explicit, because when it is silent both parties tend to assume the other has it covered.
What happens if a tenant changes what they do?
Tell us. An unreported change of use is a common cause of coverage disputes on this class, and updating the schedule is straightforward compared with arguing about it after a loss.
Related cover
Often arranged alongside this
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Read moreReady for a lessors risk insurance quote?
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