What is Lessor's Risk Only (LRO) insurance, and do you need it?

The moment your property earns rent, your homeowners policy stops covering it. Personal policies exclude business use, and renting is a business.

LRO is the fix. "Lessor" just means landlord. The policy covers what you own and what you're liable for as the owner, not what your tenant is doing inside.

What it covers

• The building. Fire, storm, burst pipe, vandalism. Pays to repair or rebuild.

• Your liability. Someone gets hurt on the property and you're blamed. A slip on an icy walkway, a stair rail that gives way.

You can buy the building coverage and skip liability. We don't recommend it. Injury claims are the ones that turn into lawsuits.

What it doesn't cover

• Flood. Never included. It's a separate policy. If you're near water, assume you're uncovered until you buy one.

• Your tenant's stuff and their business liability. That's on them, which is why your lease should make them carry their own coverage.

Apartments are different

Rent to businesses and it's mostly about the building and public liability. Rent to people and you pick up one more exposure: fair housing and discrimination complaints. A rejected applicant can file one, and defending it costs money even when you did nothing wrong. Ask whether your policy covers that defense.

So do you need it?

If it earns rent, yes. The real questions are how much building coverage to carry and which endorsements fit your property.

Send us the address, what you rent it for, and a rough rebuild cost. We'll tell you what a sensible policy looks like. No charge to ask.