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What Is Lessor’s Risk Only Insurance? An Overview for Salt Lake Landlords

Real estate is a lucrative market with ample opportunity for passive income. But those profits can mean next to nothing if you’re not properly insured. In fact, if you own any type of commercial property, it’s time to look into Lessors Risk Only, an insurance that provides specific protection to commercial landlords.

What is Lessor’s Risk Only Insurance?

Lessor’s Risk Only, also known as LRO, is a kind of small business insurance for commercial landlords. LRO protects landlords should a tenant sue them for property damage or injuries sustained while in the landlord’s building.

Lessor’s Risk Only insurance covers a pretty wide range of risks that lead to property damage or bodily injury that can arise on a property that is leased to a tenant, including:

  • Weather damage
  • Slip-and-fall injuries
  • Fire
  • Vandalism
  • Water-related damage
  • Car accidents at the property 
  • Theft

This isn’t a comprehensive list, but it covers the most common incidents LRO covers. Salt Lake landlord insurance can also cover other risks, including damage from pollution, via an endorsement to the base policy.

Who Should Get Lessor’s Risk Insurance?

This type of landlord insurance is designed for commercial property owners, including apartment buildings, office space, warehouses, retail complexes, and other kinds of commercial buildings. Typically, the landlord must not occupy more than 25% of the building leased to tenants.

Things to Watch For

When shopping for Salt Lake landlord insurance, there are some issues to watch for that can influence the premiums your insurance company can provide, including:

  • Number of tenants in the building (and how many customers/guests the building generates)
  • Percentage of occupancy (if it’s below 30%, some policies will consider the building vacant, and you will need to purchase a different type of insurance policy)
  • Crime rates in the area
  • Underwriting requirements
  • Existing hazards (electrical, poorly maintained walkways, etc.)
  • Protection by smoke detectors, carbon monoxide detectors, fire extinguishers, and sprinklers 
  • Current maintenance levels

Insurance companies want to know that the landlords they represent are doing their part to keep tenants safe, so be prepared to give details about each of those categories.

Differences Between LRO and General Liability Insurance

LRO insurance and general liability insurance are similar small business coverage types. They both protect you when others claim that you’re responsible for damaged property or bodily harm, but there’s one key difference between them: Lessor’s Risk Only applies exclusively to your tenants.  

Say a tenant slips and falls on the stairs of your building and blames you for the stairwell’s poor lighting. Your LRO would take care of the repercussions. But what if it was a UPS worker? A general liability policy would respond instead of the LRO.

Do you, as the landlord, require your tenants to carry their own general liability insurance? This is a crucial loss control technique because, as the landlord, you may have to pay claims that aren’t your fault if the tenants are not insured.

Where to Get Lessor’s Risk Insurance

As you can see, landlord insurance is a vital part of commercial real estate. If you are a Salt Lake landlord and you are interested in learning more about Lessor’s Risk Only insurance, contact Bethany Insurance today—we are experts in Salt Lake landlord insurance