Lessors Risk Insurance for Multifamily Properties in Illinois
- Nate Jones, CPCU, ARM, CLCS, AU
- Oct 14
- 2 min read
Owning a multifamily property in Illinois—whether it’s a duplex in Springfield or a 20-unit apartment building in Chicago—comes with both opportunity and risk. When you lease space to tenants, you take on legal liability for what happens on your property. That’s where Lessors Risk Insurance (LRO) comes in.
Here’s what Illinois landlords and investors need to know about lessors' risk insurance for multifamily properties.
What Is Lessors Risk Insurance?
Lessors Risk Insurance is a specialized form of commercial property insurance designed for landlords who lease residential or commercial space. It protects property owners from liability claims made by tenants or their employees for bodily injury or property damage.
For multifamily properties, this coverage is essential because:
Tenants may sue for injuries sustained in common areas (e.g., icy sidewalks, broken stair rails)
You may be held liable for damage caused by plumbing failures, fire, or structural issues
Legal defense costs can be substantial—even if you’re not at fault
What Does LRO Insurance Cover?
Typical coverage includes:
Bodily injury claims (e.g., slip and fall accidents)
Property damage lawsuits from tenants
Legal defense costs and settlements
Weather-related damage (hail, snow, wind)
Water damage from burst pipes or sewer backup
Vandalism and theft in common areas
Note: LRO insurance does not cover damage to the building itself. You’ll need commercial property insurance for that.
Illinois-Specific Considerations
Illinois multifamily properties face risks such as:
Severe storms and tornadoes
Extreme winter conditions
Dense urban liability exposure in cities like Chicago
Lenders often require LRO coverage as part of financing agreements. Additionally, landlords may need to comply with local ordinances regarding tenant safety and building maintenance.
Average Cost of Lessors Risk Insurance in Illinois
Number of units
Location and claims history
Tenant type and building use
On average, LRO insurance for multifamily properties in Illinois ranges from $1,200 to $4,000 annually, depending on risk factors.
Final Thoughts
Lessors risk insurance is a must-have for Illinois multifamily property owners. It protects you from tenant lawsuits, injury claims, and legal expenses—giving you peace of mind and financial security.
Wexford Insurance offers customized commercial property insurance for multifamily buildings across Illinois. Our policies include LRO coverage, property protection, and loss of rental income. Connect today!
FAQs
1. Is lessors risk insurance required in Illinois?
Not by law, but most lenders and lease agreements require it. It’s essential for liability protection.
2. Does LRO insurance cover tenant belongings?
No. Tenants need their own renter's insurance. LRO covers the landlord’s liability only.
3. Can I bundle LRO with property insurance?
Yes. Wexford Insurance offers bundled policies for full protection of your building and liability exposure.
