When you own a shopping center or office building, your tenants run their businesses — but you own the property, the parking lot, the common areas, and ultimately the liability that comes with all of it.
A slip and fall in your parking lot, a fire started in a tenant’s space that damages the whole building, or a lawsuit from a visitor injured in a common area — these are your problems, not your tenants’.
Lessor’s Risk Only (LRO) Insurance — The Foundation
The core policy for commercial property owners who lease space to tenants is called Lessor’s Risk Only (LRO) insurance. It’s designed specifically for your situation: you own the building, others run businesses inside it.
LRO typically combines two key coverages:
- Commercial property — covers the building itself against fire, storm, vandalism, and other covered perils
- General liability — covers third-party bodily injury and property damage claims arising from your ownership of the property
What LRO Does NOT Cover
LRO covers you as the property owner — not your tenants’ business operations. Each tenant should carry their own general liability and property insurance. Many landlords require proof of insurance (a certificate of insurance naming them as additional insured) as a lease condition.
But even when tenants have their own coverage, you can still be named in lawsuits. Your LRO policy is your protection.
Additional Coverages to Consider
Loss of rental income — if a covered loss makes part of your building unusable, your tenants may legally withhold rent or break their leases. This coverage replaces that lost income during repairs.
Ordinance or law coverage — older buildings may need to be brought up to current building codes when repaired after a loss. This coverage pays for those additional costs.
Umbrella liability — serious incidents at commercial properties can result in large verdicts. A commercial umbrella policy provides additional limits above your primary policy.
Tenant discrimination coverage — if a prospective tenant claims you denied them space based on a protected characteristic, the legal defense costs alone can be substantial.
Parking Lot Liability — Often Overlooked
Your parking lot is one of your highest liability exposures. Slip and fall claims, vehicle damage disputes, and security-related incidents can all originate in your parking areas. Make sure your general liability policy covers the full extent of your property including all common areas and parking.
What Affects Your LRO Premium?
- Total square footage and building value
- Occupancy type — restaurant tenants carry more risk than office tenants
- Property age and construction
- Vacancy rate — higher vacancy increases risk in most underwriters’ eyes
- Location and state — California and Florida carry higher litigation exposure
- Claims history
We Specialize in Commercial Property Owners
Secure Risk Partners places shopping center and office building insurance for property owners across Texas, California, Florida, Arizona, Georgia, and Washington. We work with carriers including Hartford, Travelers, and Lloyd’s of London to structure programs that match your specific property portfolio.
Get a free coverage review — we’ll show you exactly what your current policy covers and what it misses.