Liability · Insurance Term
Lessor's Risk Only (LRO)
Definition
Lessor's risk only (LRO) is general liability coverage for a building owner who leases space to tenants and does not occupy or run a business there. It covers the owner's liability as landlord, such as injuries in parking lots and common areas, while tenants insure their own operations.
In Plain English
An LRO policy is a form of commercial general liability priced for owners whose only role is landlord. Common examples are strip centers, single-tenant net lease buildings and multi-tenant warehouses. Because the owner is not running the businesses inside, LRO pricing is often based on square footage or rent rather than sales.
The owner can still be sued for things it controls, like parking lots, sidewalks, roofs and lighting. Tenants are expected to carry their own liability for their space and to name the owner as an additional insured. Under a triple net lease, the lease often shifts much of the day-to-day maintenance to tenants, but injured people commonly sue everyone.
LRO works only if the facts match. If you or a related company occupy part of the building, tell your agent so the policy is written correctly. Your lease insurance requirements should line up with the LRO coverage you buy.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: an owner leases all 8 units of a strip center to tenants. A customer slips on ice in the parking lot and sues the owner and the nearest tenant. The owner's LRO policy may defend the owner, while the tenant's own policy, with the owner as additional insured, may also respond.
What to Watch For
- Tell your agent if you or any related business occupies space in the building.
- Collect certificates and additional insured endorsements from every tenant.
- Check exclusions on the LRO policy, such as assault and battery or vacant units.
- Keep parking lot lighting, striping and repairs documented.
Common Questions
Do I need LRO if my tenants have their own insurance?
Usually yes. Tenants' policies mainly protect the tenants, and the owner can still be sued for common areas and the building itself. Additional insured status helps but has limits.
What if I run a business in one of the units?
Then the policy needs to reflect that occupancy, and it is generally not lessor's risk only for that space. Tell your agent so the coverage fits the real use.
Last updated October 14, 2026 · Primesure editorial team · How We Write