Limiting Your Liability Exposure, Part II
By David Wilhite
Sale and disposal legal liability coverage is unique to the self-storage industry. As you may recall from Part I of this article, sale and disposal legal liability provides self-storage operators with protection against conversion: the act of wrongfully taking, selling, using or destroying the goods of another party. Such claims are made against negligent acts arising from the disposition or disposal of customers' property when reclaiming space for which rental charges are delinquent or unpaid.
Due to the incredible diversity of goods commonly stored and the wide range of values of the property, the penalty for conversion can be extremely high. Not long ago a self-storage operator was held liable for $250,000 in damages by a California court for the wrongful sale of a customer's property. The court judged that the storage owner's notice of intention of sale was defective, since the operator's newspaper ad did not include the delinquent tenant's name, which was required by state law. The court ruled that the operator was in violation of negligence and conversion as a result of this error.
Nearly every state has specific statutes that govern the sale and disposal process, as provided for in the Self-Storage Facility Act. However, if the procedures are not precisely followed, the self-storage operator leaves himself vulnerable to lawsuits claiming loss or damage of stored goods.
Facilities in states where the statute has not been enacted should include a clearly-worded statement in their rental agreements that the owner serves as a landlord renting space to tenants suitable for storage; that neither the owner nor the facility exerts any care, control or custody over a tenant's property; and that responsibility for stored property remains vested with the tenant and not the landlord.
Most self-storage insurance providers offer sale and disposal legal liability coverage, which includes loss or damage to your customer's personal property, and protects you against claims arising from the sale, removal, disposal or disposition of customers' property when reclaiming space for which rental or other charges are delinquent or unpaid. The coverage further provides for defense and legal costs, even if a customer's suit is groundless or fraudulent. Best of all, the cost is quite reasonable for the peace of mind and protection you receive.
David Wilhite is marketing director of Universal Insurance Facilities Ltd. For more information, contact Universal at Box 5400, Scottsdale, AZ 85261-9957, call (800) 844-2101 or fax (602) 970-6270.