Lessors Risk

About Lessors Risk Only Policies

Landlord insurance for commercial properties dates back to the 1920s when standard fire policies began adding legal liability for tenants' operations, but the industry formally embraced Lessors Risk Only (LRO) schedules after ISO released its standard LRO form in 1993 to address multi-tenant retail and office exposures.¹

As triple-net leasing grew in the 2000s, insurers developed combination property/liability packages so building owners could meet lender covenants even when tenants carried their own general liability, codifying requirements for tenant certificates, hold harmless agreements, and rent-protection endorsements.²

Modern programs now extend to mixed-use corridors: specialty markets handle cooking, cannabis, or warehouse tenants by layering protective safeguards, giving landlords the flexibility to fill suites without sacrificing insurance compliance.^3,4

Coverage Highlights

LRO packages combine building, liability, and rent protection tailored to multi-tenant retail, office, and light-industrial footprints.

• Building & Common Areas: Covers structures, shared HVAC, signage, landscaping, elevators, and parking lots so a windstorm-damaged canopy or lighting system is repaired quickly.¹
• Premises Liability & Tenant Legal Liability:  Addresses visitor injuries and tenant-caused fire or water damage, with options for contractual liability when leases shift obligations upstream.²
• Tenant Improvements & Plate Glass: Pays to rebuild interior build-outs or replace large storefront windows so owners can satisfy lease promises without tapping reserves.³
• Business Income from Rents: Reimburses lost rent when multiple suites close after a covered loss, aligning with loan covenants and investor distribution schedules.⁴
• Equipment Breakdown & Utility Interruption:  Keeps escalators, boilers, and electrical systems insured, while utility interruption coverage pays for spoilage or loss of rent when power is off-site.⁵
• Security & Parking Lot Liability: Extends protection to exposures tied to lighting, patrols, or valet services in common areas.⁶

Rising Costs

Commercial real estate insurance costs jumped 20% in 2024, with Sun Belt metros seeing even larger increases driven by wind, hail, and reinsurance scarcity; that trend spills over to Northeast renewals as carriers rebalance portfolios.¹

Insurance Office of America reports 2025 rate hikes of 10%-25% for frame construction and accounts with vacancy over 20%, citing crime and weather as top underwriting concerns.²

Manhattan's average vacancy climbed past 16%, meaning empty suites sit longer and insurers price higher loss-of-rent and vandalism risk—an inference we apply to owners watching suburban offices adapt to hybrid work.³

Meanwhile, severe-convective-storm losses were $68 billion for 2024, the fourth year above $20 billion, pushing property insurers to tighten deductibles and attachment points for wind-driven perils, even in inland states.⁴

Cheaper Premiums

• Enforce tenant insurance & contracts: LRO specialists stress requiring additional insured endorsements, hold-harmless language, and certificates for every tenant, steps that lower carrier-perceived risk.¹
• Install monitored security and lighting: Many carrier underwriting guidelines show credits for camera systems, access control, and monitored alarms because they reduce crime frequency by up to 50%.²
• Document roof and life-safety upgrades:The 2025-2026 outlook confirms that new roofs, sprinklers, and fire alarms are the fastest path to preferred pricing tiers.³
• Right-size valuations & deductibles: Try to trend replacement costs and consider higher wind or hail deductibles to keep total insured value (TIV) aligned with actual exposure, preventing coinsurance penalties while lowering base premiums.⁴

What We Do

We can help with securing Lessors Risk Only insurance for commercial landlords across New York City and the Hudson Valley. Our carriers allow us to find coverage solutions that meet lender requirements while efficiently managing premiums.