Lessors Risk Insurance for Apartment Buildings: Coverages Explained
- Nate Jones, CPCU, ARM, CLCS, AU
- Oct 13
- 2 min read
Apartment building owners face unique risks when leasing their properties. This blog explains what Lessors Risk Insurance (LRO) covers, why it’s essential, and how Wexford Insurance can help protect your investment.
What Is Lessors Risk Insurance?
Lessors Risk Insurance, also known as Lessor’s Risk Only (LRO) insurance, is a specialized policy designed for landlords who lease out commercial or residential properties like apartment buildings. It provides liability protection and, in some cases, property coverage for incidents involving tenants or their guests.
This type of insurance is especially important for apartment building owners who want to protect themselves from lawsuits, property damage, and income loss due to tenant-related incidents.
What Does LRO Insurance Cover for Apartment Buildings?
LRO insurance typically includes:
Premises Liability: Covers bodily injury or property damage claims from tenants or their guests. For example, if a tenant slips on a wet stairwell, LRO can cover medical and legal costs.
Legal Defense Costs: If a tenant sues you, the policy can help pay for attorney fees and court expenses.
Property Damage (Optional): Some policies include limited coverage for damage to the building caused by tenant negligence, such as fire or water damage.
Loss of Rental Income: If a covered event makes your property uninhabitable, LRO may reimburse lost rental income.
What’s Not Covered?
LRO insurance does not cover:
Damage to the tenant’s personal property
Structural damage to the building (unless bundled with commercial property insurance)
Tenant business operations or inventory
Maintenance-related issues not caused by tenants
For full protection, landlords should also consider:
Umbrella Liability Coverage
Why Apartment Building Owners Need LRO Insurance
If you lease out even a single unit, you’re exposed to liability. A single lawsuit could cost thousands in legal fees or settlements. LRO insurance helps mitigate that risk and is often required by lenders for financed properties.
Additionally, apartment buildings have shared spaces—hallways, stairwells, parking lots—where accidents can happen. LRO ensures you’re protected in these common areas.
Final Thoughts
Lessors Risk Insurance is a must-have for apartment building owners who lease to tenants. It protects your financial interests, reduces liability exposure, and ensures peace of mind. At Wexford Insurance, we specialize in crafting tailored insurance solutions for commercial property owners. Whether you own a single apartment building or a portfolio of multifamily units, we’re here to help. Connect today!
FAQs
1. Is LRO insurance required by law?
No, but many lenders require it for financed properties. It’s also a smart risk management tool for landlords.
2. Can I bundle LRO with other policies?
Yes. Many insurers offer bundled packages that include commercial property, general liability, and business interruption coverage.
3. Does LRO cover tenant-caused fires?
Yes, if the fire results in damage to common areas or causes injury. However, damage to the tenant’s belongings is not covered.