By David Wilhite
Today's juries are routinely awarding tremendous sums of money for personal injury lawsuits that seem to surpass all sense of proportion and common sense. Approximately 10 million civil cases are filed each year, resulting in jury awards totaling in hundreds of millions of dollars. Despite these statistics, a recent survey conducted by a major insurance company showed that the vast majority of its customers knowingly purchase liability limits that would not fully indemnify them against the awards being handed down by today's juries. This can be a very dangerous practice, especially in view of today's litigious climate.
If you believe your current limits of liability are adequate, consider the case of the delivery man who fell in a customer's parking lot and injured his back while making his rounds. The jury awarded him $1.95 million. In another case, a woman suffered massive trauma when she was hit on the head by a wooden toolbox that fell off a shelf in a hardware store. She received a $22 million award for her injuries.
These examples serve to illustrate three important points: 1) juries are routinely awarding enormous sums in personal-injury cases; 2) the liability limits you choose can spell the difference between solvency and bankruptcy; 3) liability limits of $1 million or more must no longer be considered unusual or excessive.
Fortunately, the news is not all bad. Increased liability limits are readily available for self-storage facilities in $1 million, $2 million and $3 million -limits; and most facility owners can purchase an additional $500,000 coverage for about $350 per year on average.
Assuming you accept the need to increase your liability insurance, how do you go about estimating the amount of coverage that's right for you? Some experts say you should base your limits on multiples of your annual revenues, but that can be costly. The best method I've found for determining coverage limits is to ask your agent what kinds of claims have been filed against similar businesses in the past and what the results were. Base your limits accordingly. If you are on an extremely tight budget, evaluate how much you can afford to lose and make sure your coverage protects you to at least that point.
Remember, a catastrophic loss can deliver a knockout punch that can devastate your financial future--so don't put yourself at risk. No matter how large or small your self-storage facility may be, securing adequate coverage is essential for protecting your business and your peace of mind.
David Wilhite is the marketing manager of Universal Insurance Facilities Inc. Universal offers a complete package of coverages specifically designed to meet the needs of the self-storage industry, including loss of income, employee dishonesty, comprehensive business liability, hazardous-contents removal and customer storage. For more information, contact Universal at Box 5400, Scottsdale, AZ 85261-9957; phone (800) 844-2101; fax (602) 970-6240; Web www.vpico.com/universal.