If you own a commercial building and lease it to tenants, the single most important coverage decision is structural: are you on a Lessor's Risk Only program or a Business Owners Policy? They sound interchangeable to a lot of agents. They aren't, and putting a landlord on the wrong one leaves a gap that doesn't show up until a claim.
What each is built for
| LRO | BOP | |
|---|---|---|
| Designed for | An owner who leases the building to tenants | An owner-operator running a business in the space |
| Liability scope | Landlord premises liability — structure, common areas, roof, lot | The operations of the business inside |
| Income coverage | Lost rents | The operator's business income |
The gap each creates on the wrong owner
Put a landlord on a BOP, and the liability coverage is scoped to business operations they don't run — while the landlord exposures they do have (premises, common areas, the lease relationship) may be addressed poorly or not at all. Put an owner-operator on an LRO, and their actual business operations aren't covered. Either way, the policy is answering a question the insured didn't ask.
Why LRO depends on your tenants' insurance
Because an LRO scopes the tenants' operations to the tenants, your protection assumes those tenants actually carry their own liability and name you as additional insured. When a tenant is uninsured or under-insured, their exposure drifts back onto your LRO. That's why verifying tenant certificates — additional-insured wording, limits, expirations — isn't paperwork; it's how the LRO structure holds together.
Common LRO properties
Strip centers and single-tenant retail, office buildings, mixed-use where you're the landlord, and leased industrial space. If you own it and lease it out without operating inside it, LRO is almost always the right structure — and we confirm which one you are before binding.