By David Wilhite
Business-liability insurance provides essential protection for every self-storage-facility owner. Business liability protects you against bodily-injury lawsuits, such as a lawsuit claiming that someone slipped and fell due to wet or icy conditions on your premises, and property-damage lawsuits, i.e., a lawsuit claiming that a gate crashed down on a car while on your premises. Business liability also provides important protection against lawsuits involving libel, slander, physical eviction or the false arrest of a third party, as well as advertising-injury lawsuits involving plagiarism, copyright infringement and false advertising. (Note that while libel, plagiarism, etc., may not seem like bodily or property damages, that's how the courts have interpreted them).
The important point for you to remember about business liability is that if you are found liable in a lawsuit, business-liability insurance will cover those sums that you become legally obligated to pay up to the limits of your policy. In short, it protects your business, your assets and your peace of mind. Therefore, since business-liability insurance is one of the basic costs of doing business--and since you, as a smart consumer, want to invest your insurance dollars where they will do the most good--this month's column will provide a brief overview of liability-limit options, and why you should consider higher limits of protection.
It should come as no surprise that today's juries are routinely awarding tremendous sums of money in bodily-injury and property-damage lawsuits. More than 10 million civil cases are filed each year, resulting in hundreds of millions of dollars in jury awards. What is surprising is that a recent survey conducted by a major insurance company revealed that many, if not most, business owners purchase liability limits that will not fully indemnify them against the awards typically being handed down by today's juries. Obviously, this can be a very dangerous practice, especially in today's litigious climate.
If you think your current limits of liability are adequate, consider these three cases: Four years ago, a jury awarded a $1.95 million judgement to a delivery man who slipped and fell on cracked pavement while making his rounds to a business. Three years ago, a jury awarded $3.5 million to a man who sustained serious personal injury after falling in a hotel shower. And just two years ago, a jury awarded $22 million to a woman who went into a coma after being struck on the head by a heavy toolbox that she pulled off a shelf in a hardware store.
These cases illustrate three important points: first, juries routinely award enormous sums of money in personal-injury cases; second, the liability limits you choose can spell the difference between solvency and bankruptcy; and third, liability limits of $1 million or more, which were considered adequate for many business owners just a few years, must no longer be considered unusual or excessive.
Fortunately, business-liability insurance coverage is readily available for self-storage facility owners at reasonable rates. Increased liability limits can be purchased in $1, $2 and $3 million limits for just hundreds of dollars extra per million per year.
Assuming you've reviewed your business coverage and decided to increase your liability limit, how do you go about estimating the amount of coverage you'll actually need? Some experts recommend that you base your limits on multiples of your annual revenues. Another method for determining adequate coverage limits is to ask your agent what kinds of claims have been filed against storage facilities in the past and what the results were. You may also want to consult with a legal professional to find out the circumstances and kinds of awards (in dollar amounts) that have been made in your state in the past few years for similar businesses. Base your limits accordingly. If you are on an extremely tight budget, evaluate how much you can afford to lose if a judgment is made against you, and make sure your coverage protects you to at least that point.
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 40079, Phoenix, AZ 85067-0079; phone (800) 844-2101; fax (480) 970-6240; www.vpico.com/universal.