Lessor's Risk Insurance Definition

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A businesswoman is sitting at a desk. (Image: James Woodson/Digital Vision/Getty Images)

Property insurance policies, both personal or commercial, come in many types depending on the type and property and the type of policy that is needed. One type of commercial property insurance policy is known as lessor's risk. This type of policy has been developed for building owners who are leasing their buildings to others. A policy provides coverage for liability as well as property and is also known as landlord's insurance in some places.

Policy Needs

A lessor's risk policy may be needed by various types of people and business depending on what the needs are for the policy. Many people or businesses that lease buildings to others have a responsibility to the building as does the lessee. Property owners that provide leases for office buildings or have various apartment units or complexes will have a need for a lessor's risk insurance policy.

Coverage

There are many coverages that are provided with a lessor's risk insurance policy which includes liability and property damage. An endorsement can even be added to some types of policies to add coverage for bodily injury and legal liability for any pollution that may occur. The general liability section of a lessor risk policy provides additional liability when an accident or injury occurs when a leased building is being occupied by a lessee.

Policy Risks

A lessor's risk insurance policy is issued based on risks that are eligible for coverage and ineligible for coverage. Eligible risks can include having no firearms on the premises and having no more than two claims in the past three years. Ineligible risks can include buildings that are greater than 100,000 square feet in area and specific business activities such as running a nursing home or an assisted living facility. A lessor's risk policy is typically not provided for ineligible risks.

Credits

Many insurers that provide a lessor's risk policy provide credits or discounts when certain conditions have been met. This can include adding a commercial tenant of a leased building as an additional insured on a policy. Another credit that can be applied to a policy is requiring a tenant to be responsible for certain aspects of the building or property. This can include snow removal from sidewalks during the winter and the condition of pavement and curbs.

Limits

A lessor's risk insurance policy can be purchased with limit amounts that are required or specifically needed by an insured. Most policies provide limits of $1 million to $3 million per occurrence of liability coverage for each location listed on the policy. If pollution coverage is included on a policy coverage can range from $250,000 to $300,000 per occurrence. Limits can usually be increased to whatever is needed by a property owner.

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