By Alice Cravens
Customer storage insurance, tenant insurance, stored-property insurance. All of these names sum up one of the most valuable services a facility manager can offer customers. Like many managers across the country, you may already have these insurance brochures sitting on your counter. You may even glance at them from time to time and wonder how to incorporate them more effectively and easily into your leasing presentation.
This article will take a look at customer storage insurance from two different angles: First, it will briefly review the basics. Getting back to the roots of what you are doing is always important regardless of your years of experience. And second, it will take a look at how to make the program you choose more effective at your facility--without spending more time or finding yourself trying to fill the shoes of an insurance agent.
Part I: The Basics
What is customer storage insurance?
Customer storage insurance is insurance that your customers can buy for the belongings that they store at your facility. It is offered right at your facility--the most natural place to obtain this small and often short-term policy. There are usually about a dozen different situations (perils) commonly covered by a customer-storage-insurance policy: Fire, windstorm, burglary, collision and certain kinds of water damage (such as roof leak) are some of these perils. Depending on the program, limits of coverage can range from $2,000 to more than $30,000, with policy terms ranging from a month to a year.
In many areas, a manager can choose between two different program formats: a mail-in brochure program, where a customer mails an application to the insurance provider with payment; or a pay-with-rent program, where the customer signs up and pays for insurance coverage with the monthly payment for their storage space. The manager then forwards the collected premiums to the insurance company at the end of every month.
Why offer customer storage insurance?
For any of the following reasons:
- It may help to protect your liability, even when a customer decides not to insure.
- It clarifies responsibilities while serving your customer.
- It streamlines catastrophe management.
- It costs you nothing.
Customer storage insurance developed out of the needs of both storage managers and customers. It is easy for customers to assume that their property stored at a facility is protected from loss in the same way that a moving-and-storage company would provide protection. A moving-and-storage company acts as a bailee, and usually holds property in its care, custody and control. Customers may have certain legal rights because of this. A typical self-storage facility simply leases space to tenants just like a commercial building owner. Even though the lease spells out responsibilities, customers may still be confused. The availability of customer storage insurance can help to clarify this.
So, customers needed a way to get insurance for their stored belongings easily and inexpensively. Not all homeowners policies provide coverage for property stored elsewhere, and many customers do not have homeowners insurance to begin with because they are renting or in transition. With insurance available right at the facility's counter, customers can fill out a form in the rental office that 1) shows that the facility offers this extra service; 2) reminds the customer of his or her own responsibilities; and 3) allows the customer to get coverage easily.
One of the best features of a customer-storage-insurance program, however, is not just that it clarifies responsibilities, but that it creates useful documentation when a customer accepts or declines coverage. This documenting capability is often contained in the materials supplied by the insurance provider. Here is an example of wording you might see on these documents that allows customers to actively acknowledge their responsibilities.
TENANTS STORE PROPERTY AT THEIR OWN RISK
I understand this self-storage facility and/or its management:
- Is a landlord renting space, is not a warehouseman, and does not take custody of my property;
- Is not responsible for loss or damage to my property;
- Does not provide insurance on my property for me; and
- Requires that I provide my own insurance coverage or personally assume risk of loss or damage.
TENANTS CHOICE OF INSURANCE OPTIONS
I have been given a brochure that explains the customer storage insurance available here. As initialed below, I agree to obtain insurance coverage on property in my storage space for its actual cash value or personally assume risk of loss or damage.
Please initial only one:
- "Customer Storage Insurance Policy"
- From my own insurance agent
- Personally assume risk of loss or damage.
What Kind Of Stored Property Is This Insurance Designed For?
Most customer-storage-insurance programs are location-based, meaning that the insured property does not move from its specific location while it is insured. There is more flexibility in today's programs in terms of payment plans, limits and crime coverages (such as choosing between 50 percent and 100 percent theft or burglary coverage). Most customer-storage-insurance policies still value property at an actual cash-value basis as opposed to replacement-cost coverage. Some policies might also have limitations on business property or items that might need more specialized coverage such as antiques, fine art and jewelry.
Customer storage insurance is usually not designed for:
- Outside storage spaces
- Records storage
- Property that is moved to and from a unit during the coverage period.
Getting a Program at Your Facility
Most of the insurance carriers specializing in self-storage offer a variety of customer-storage-insurance programs. As no two programs are exactly alike in coverage and administration, compare them and see which best suits your and your customers' needs. Coverage differences, limits provided, costs and payment terms can affect your customer's buying decision. Most insurance providers limit the availability of their programs because they must manage their own costs and catastrophe exposure--and have insurance regulations in each state that govern the program. You may want to find out what qualifications may apply to your location for the programs you are interested in.
PART 2: Presenting Customer Storage Insurance
Unfortunately, insurance is often a subject that people would prefer to avoid--and managers sometimes fear that it might cause potential customers to conjure up thoughts of disaster at the facility. But the truth of the matter is that those facilities that have seen disaster usually become the biggest insurance advocates afterwards. They have seen first-hand that being insured makes handling a catastrophe much more bearable for everyone. Start preparing your facility now by addressing the insurance issues in a straightforward way with your customer. And, if you find yourself rushing through the subject of insurance to avoid having your customer think that there are problems at your facility, try using these suggestions to improve your comfort level:
1. Prepare yourself. Because customer storage insurance is for your customer and not you, it is easy to keep it at a distance. If you haven't recently done this, try reading the brochure that describes your program from start to finish--not just once, but a few times. Being familiar with what you are offering will lessen the uneasiness you may have without adding to your responsibilities.
Keep in mind that knowledge is power, and while you might be tempted to answer your customers' insurance questions yourself, you are not licensed as an insurance agent. Therefore, you should refer customers to the brochure and the insurance provider. Many insurance providers also supply manager's guides as additional support for you, as well as toll-free numbers for you and your customer. Don't let the fear of the unknown be a barrier to you or your customer. If you are unsure of what is on your counter, your customer will be, too.
2. Prepare your customer. Mention insurance along with the extra services that you provide early in your discussions with customers. This can be done when you are first walking the property with the customer or even over the phone. Customers are often uncertain about the need for insurance and mentioning it early can be helpful.
3. You can't fight Mother Nature. The biggest fear that many managers have involving customer storage insurance is being faced with questions from customers such as, "Why do I need insurance?" and "Is this insurance available because you have a problem here?" No one enjoys hearing questions like these after selling the attributes of a facility. Offering customer storage insurance does not mean that problems have infiltrated your facility. Ironically, because a facility has to be approved by an insurance provider before materials will be supplied, it is often the other way around.
One of the best reasons to make insurance available is this: Even though you may have the latest security features and strong construction, Mother Nature is stronger than the most protected storage facility. If you find yourself faced with these kinds of questions, remind your customers that situations can happen beyond anyone's control (and refer them to the insurance provider, too). Windstorms, earthquakes and fires cause more extensive damage than burglaries. Some managers even display pictures of what hurricanes have done to their local area over the years as a way to bring home this reality.
Wouldn't you rather be fully prepared if you were spending time, energy and money storing at a facility? As with all customer service, putting yourself in your customer's shoes will help you develop your most comfortable approach to working successfully with your customer-storage-insurance program.
As a marketing manager for Deans & Homer, Alice Cravens has worked with customer storage insurance and a variety of other service-oriented insurance programs for more than a dozen years. Deans & Homer is one of the founding insurance providers for the self-storage industry, and offers comprehensive insurance coverage for facilities as well as a variety of customer storage insurance programs. Ms. Cravens may be reached via e-mail at firstname.lastname@example.org.
Help Protect Yourself Against Litigation With CSI
By David Wilhite
Customer storage insurance (CSI) can protect more than just your tenants' stored goods--it can protect your peace of mind. By simply making CSI available, you can help reduce the threat of litigation from tenants who have suffered damage to their stored goods. Consider these three important facts:
Fact #1: Every self-storage facility operator is subject to lawsuits from tenants who have suffered damage to their goods while in storage.
Fact #2: There are precedent-setting court cases in which the self-storage operator was found to be not liable for damage to a customer's goods because CSI was made available.
Fact #3: One key element in any legal defense against claims of negligence or liability (on the part of the operator) is whether or not CSI was made available to the tenant while he was renting.
By offering CSI to your existing and prospective tenants, you can move toward compliance with the laws in your state while helping protect yourself from potential litigation. Getting a CSI program started is easy. Some agencies that cater exclusively to the self-storage industry do all the work for you. Why risk the worry and expense of litigation when you can protect yourself and your facility so easily?
For more information, call Universal Insurance at (800) 844-2101. As a service to its insureds, Universal offers low-cost customer-storage insurance that can be purchased at any time by new and existing tenants. Universal provides the brochures, applications, lease addendums and point-of-purchase display materials necessary to promote the program, and provides full staff support--there is no cost, paperwork or program maintenance involved.
Note: Universal does not offer CSI in Florida or Kentucky. A sample of the actual CSI policy with exact terms and conditions is available upon request. Universal's CSI program is underwritten by Ranger Insurance.