Self-storage owners should consider an insurance specialist that can provide a business-owner’s policy tailored to the industry. While most standard policies provide coverage for your building, business-personal property and business liability, a self-storage policy typically offers coverage to help guard against issues and hazards that only surface in self-storage.
Customers’-Goods Legal Liability
Customers’-goods legal liability is one such coverage. When you own a self-storage facility, you act as a landlord, not a warehouseman, because you never take possession of your tenants’ goods. You are not responsible for those goods, since you are simply renting space. However, there are certain situations that can create legal liability on your part. For example, by providing a building in which to store goods, you represent protection against the elements. If customers’ property is damaged by water because you did not properly maintain your roof, he may feel you were somehow negligent in honoring that representation.
If you are found legally liable for damage to tenants’ property, your customers’-goods legal-liability insurance coverage will probably pay the claim. It might also provide defense costs, even if a claim is found to be groundless, false or fraudulent. It also includes coverage for damage done to customers’ goods stored in the open. This coverage is not normally available in the standard insurance market and usually cannot be added to the business-owner’s package policy. It is available only through self-storage insurance.
Business-liability insurance provides protection against lawsuits claiming someone was hurt or property was damaged on your premises. It provides protection against personal-injury lawsuits involving libel, slander, physical eviction or false arrest of a third party. It also protects against advertising-injury lawsuits involving plagiarism of advertising copy or layout; infringement of copyright, title or slogan; or false advertising. These may not seem like bodily or property damages, but that is how the courts have interpreted them. If you are found liable, business-liability insurance pays those sums you become legally obligated to pay.
Every self-storage owner needs to protect his income against business interruptions. If you should sustain a direct physical loss from a fire or other covered cause, chances are good you will also suffer an indirect loss of income. Indirect losses refer to the lost profits and the fixed expenses that continue from month to month, whether or not your facility is operating. You are also likely to incur extra expenses as you attempt to resume your normal business operations.
Business-interruption insurance, also referred to as “business income” and “extra expense” insurance, is designed to reduce your risk in the event of a loss. It protects you against reduced income and increased expenses that result from damage to your buildings or business-personal property. It allows you to retain key employees by maintaining their salaries and benefits. In addition, it encourages prompt settlement of building and business-personal property losses. It helps you to retain your tenants and can restore you to the same position you were in before the loss occurred.
Business-interruption insurance is usually included in most business owners’ policies as a standard endorsement. However, when you consider business-interruption losses can easily exceed direct-damage losses, the importance of this coverage becomes clear.
Sale-and-Disposal Legal Liability
Sooner or later, every self-storage owner will be faced with the unenviable task of evicting a tenant for failing to pay his rent, reclaiming the storage space and removing or disposing of the tenant’s property. Sale-and disposal legal-liability coverage provides protection against conversion: the act of wrongfully taking, selling, using or destroying the goods of another party.
Nearly every state has specific statutes governing the sale-and-disposal process. However, if the procedures are not followed to the letter, or if there is an error in any step of the process, self-storage operators are left vulnerable to lawsuits claiming loss of or damage to stored goods. 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.
Choosing a Company
When it is time for you to purchase a policy, you will want to work with a quality insurance company with a strong financial rating. The rating indicates the company’s financial ability to pay out future claims and benefits. You can research a company or agency’s financial rating through organizations such as A.M. Best, which provide an independent opinion of a company’s strength based on a series of financial evaluations.
If you are new to the industry, you can contact your state self-storage association for insurance information and referrals. The national Self Storage Association is a great resource if your state does not have its own organization. Also, refer to industry trade magazines; they will more than likely have information regarding insurance programs. Most self-storage insurance specialists will work with your local agent.
Universal Insurance Facilities Ltd. offers a comprehensive package of coverages specifically designed to meet the needs of the self-storage industry. For more information, or to get a quick, no-obligation quote, write P.O. Box 40079, Phoenix, AZ 85067-0079; call 800.844.2101; fax 480.970.6240; e-mail email@example.com; visit www.vpico.com/universal.