As a commercial landlord, you face the risk of tenant lawsuits for injuries or property damage. From slip-and-falls to fire, unexpected events can lead to costly litigation.
Lessor's Risk Only (LRO) insurance is your safety net. Designed specifically for commercial landlords who rent out their building spaces (e.g., warehouses, offices, apartment complexes and retail spaces), an LRO policy can help cover legal expenses resulting from a tenant's lawsuit as well as reimburse the cost of the tenant's property damage or bodily injury.
Claims Scenario: Watch Your Step!
- The Company: A commercial landlord manages a building with multiple office tenants who utilize a main hallway to get to their leased office spaces.
- The Challenge: When a lightbulb burns out, the now dimly lit hallway becomes a safety hazard. One morning, a tenant walking in the poorly lit hallway loses his footing and sustains a broken leg in the fall. They believe the inadequate lighting contributed to the accident and file a lawsuit against the landlord, citing negligence in maintaining proper illumination within the building.
- LRO Insurance in Action: Slips and trips are some of the most common injuries and can happen at any building. A range of property concerns, from damaged floors and uneven surfaces to poor lighting and icy conditions can cause injuries. A commercial landlord could be held responsible for failing to safeguard their building and protect their tenants from slip and trip hazards. LRO insurance is designed to address such situations. In this case, LRO coverage could offer the landlord valuable financial protection for legal costs of the tenant's lawsuit and help recoup the medical expenses resulting from the injury.
Claims Scenario: Window Shopping Gone Wrong
- The Company: A commercial landlord manages a retail facility with multiple tenants.
- The Challenge: The landlord utilizes an alarm system to secure the building after hours. However, for the system to function properly, it needs to be activated each night. One evening, the landlord forgets to activate the alarm. That night, criminals break into the facility without triggering the alarm and vandalize the property, smashing the windows of a tenant's leased space and destroying merchandise display shelves. Upon discovering the damage, the tenant sues the landlord, claiming that the damage resulted from the landlord failing to activate the alarm system to secure the building.
- LRO Insurance in Action: Unexpected events can lead to property damage for a commercial landlord's tenants. In these situations, the tenant may hold the landlord accountable for their actions (or inactions) that caused or worsened the damage. Whether a tenant's property damage is due to theft, vandalism, fire or other covered event. LRO insurance offers crucial protection if a tenant sues the landlord for such damages, covering legal fees and the cost of repairs or replacements.
Why Purchase LRO Insurance?
Don't confuse LRO with your regular commercial insurance. Specifically, general liability coverage offers protection for lawsuits brought on by third parties (e.g., visitors) who experience property damages or bodily injuries at a commercial landlord’s property—not such legal action from tenants. Further, commercial property insurance can cover property damages caused by unexpected events—not damages caused by a landlord’s own wrongful acts (e.g., poor property inspection and repair procedures or inadequate precautionary measures). With this in mind, it’s vital that commercial landlords secure both traditional insurance policies and LRO coverage to maintain robust protection against a range of potential risks. Contact us today for additional insurance guidance and solutions
What LRO Insurance Typically Covers:
- Tailored Coverage: LRO is designed for commercial landlords who lease the majority of their building spaces to tenants. LRO policies are developed with landlords' specific risks in mind and can often be tailored to the specific type of building being rented out.
- Disaster Relief:If a tenant blames a commercial landlord for any damages or injuries incurred on the landlord’s property after a disaster related to fire, water or weather (e.g., failure to protect the pipes from bursting in freezing temperatures), LRO coverage can offer protection for the resulting costs.
- Theft and Vandalism:If a tenant sues a commercial landlord for any damages or injuries obtained on the landlord’s property following a theft or vandalism incident (e.g., utilizing a faulty security system), an LRO policy can help with the associated expenses.
- Tenant Reimbursement: LRO insurance doesn't just protect you, it helps your tenants too! They can get reimbursed for damages or injuries sustained on their landlord’s property. However, it’s important to note that most LRO policies still require tenants to secure their own property and liability coverage rather than simply rely on their landlord’s insurance.
- Legal Expense Assistance: Lawsuits are expensive. LRO insurance can assist with these expenses, protecting commercial landlords from potential financial setbacks following such legal action
It is vital that commercial landlords secure both traditional insurance policies and LRO coverage. Secure your LRO insurance today and enjoy the peace of mind that comes with knowing you're protected. Contact DiNicola Insurance Services for a free quote and discover how LRO insurance can safeguard your business.