What Is Lessor’s Risk Insurance and Why Landlords Need It
Owning a rental property can be a great source of income, but it also comes with responsibilities—and risks—that many landlords underestimate. A tenant accidentally causes a fire. A visitor slips and falls on the property. A storm damages the building, and tenants move out temporarily. Suddenly, your rental property turns into a financial headache.
This is exactly why Lessors Risk Insurance exists.
If you’re a landlord, relying on standard homeowners insurance or your tenant’s renters’ insurance can leave you dangerously exposed. In this guide, we’ll clearly explain what Lessors Risk Insurance is, why landlords need it, what it covers, and how it protects your rental income and property—all in simple, easy-to-understand language.
Let’s break it down.
What Is Lessor’s Risk Insurance?
Lessors Risk Insurance is made for property owners who rent out their property to tenants. It protects the landlord’s interest in the building, but not the tenant’s personal items.
This policy is commonly used for:
- Residential rental properties
- Commercial rental buildings
- Mixed-use properties
Homeowners insurance is for homes you live in yourself, while Lessors Risk Insurance is for properties where someone else lives or runs a business.
Insurance companies like E360 Insurance can help landlords tailor Lessor's Risk Insurance policies to fit the property type, location, and rental situation.
Who Needs Lessor’s Risk Insurance?
You should strongly consider Lessors Risk Insurance if:
- You rent out a house, condo, or apartment.
- You own a commercial building leased to businesses.
- You earn rental income.
- You don’t live in the property yourself.
- You want protection from lawsuits and property damage.
Whether you’re new to being a landlord or have several rental units, this coverage helps protect your investment and gives you peace of mind.
What Does Lessors' Risk Insurance Cover?
Coverage can vary depending on the policy, but most Lessors Risk Insurance plans include the following key protections:
1. Property Damage Coverage
This Insurance covers damage to the physical structure of your rental property, including:
- Fire and smoke damage
- Windstorms and hail
- Vandalism
- Certain water-related damages
- Theft of landlord-owned fixtures
If your rental building is damaged, Lessor's Risk Insurance helps cover repair or rebuilding costs.
2. Landlord Liability Protection
As a property owner, you can be held legally responsible if someone is injured on your property.
Liability coverage helps protect you from:
- Medical expenses
- Legal defense costs
- Settlements or court judgments
For example, if a tenant’s guest slips on a broken step, Lessors Risk Insurance can help cover the resulting costs.
3. Loss of Rental Income Coverage
If your property becomes uninhabitable due to a covered loss, this coverage helps replace lost rental income while repairs are underway.
This is especially important if rental income is used to pay:
- Mortgage payments
- Property taxes
- Maintenance expenses
Insurance experts at E360 Insurance often recommend this coverage for landlords who rely heavily on rental income.
4. Optional Add-On Coverages
Depending on your property and risk level, you may add:
- Equipment breakdown coverage
- Ordinance or law coverage
- Umbrella liability insurance
- Flood or earthquake insurance (usually separate)
What Lessors Risk Insurance Does NOT Cover
Understanding exclusions is just as important. Most policies do not cover:
- Tenant’s personal belongings
- Intentional damage caused by tenants
- Normal wear and tear
- Tenant business operations
- Long-term vacant properties (unless disclosed)
This is why landlords should encourage tenants to carry renters’ insurance in addition to their own coverage.
Lessor's Risk Insurance vs. Homeowners Insurance
Many landlords mistakenly assume homeowners' insurance is enough. It’s not.
Here’s a simple comparison:
| Coverage Feature | Homeowners Insurance | Lessor's Risk Insurance |
| Designed for rental properties | No | Yes |
| Covers landlord liability | Limited | Strong protection |
| Covers rental income loss | No | Yes |
| Covers tenant belongings | No | No |
| Suitable for tenant-occupied homes | No | Yes |
Using the wrong policy can lead to denied claims—a costly mistake.
Why Landlords Truly Need Lessor's Risk Insurance
1. Tenants Increase Liability Risk
Even responsible tenants can have accidents. As the property owner, you are usually the one who is legally responsible.
2. Lawsuits Can Be Financially Devastating
Legal fees can add up to thousands of dollars. Lessors Risk Insurance helps protect you from these unexpected costs.
3. Rental Income Can Stop Overnight
Without loss-of-rent coverage, a damaged property could mean months without income, while your bills keep coming.
4. Mortgage Lenders Often Require It
Many lenders will not approve or keep loans on rental properties unless you have the right landlord insurance.
5. It Protects Your Long-Term Investment
With help from companies like E360 Insurance, landlords can create insurance plans that protect their property value and financial security.
How Much Does Lessors' Risk Insurance Cost?
The price depends on several things, such as:
- Location of the property
- Type of building
- Property value
- Coverage limits
- Claim history
It usually costs more than homeowners insurance, but it is much cheaper than paying for repairs, lawsuits, or lost rental income yourself.
Final Thoughts
Being a landlord means thinking beyond rent checks. Lessors Risk Insurance protects your property, income, and financial future from unexpected events.
Working with experienced providers like E360 Insurance can help you choose the right coverage, avoid gaps, and gain confidence knowing your rental property is properly protected.
If you rent out property of any kind, Lessor’s Risk Insurance isn’t just smart—it’s essential.