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Tenant Insurance for Canadian Self-Storage

Toby Struewing Comments

Times are changing for the self-storage business in Canada as it becomes more sophisticated and consumer-savvy. Thirty years ago, making an insurance product available to your tenants was probably not on your radar but it may be likely today. Self-storage tenants expect a storage facility to provide more than just space. Insurance, like packing materials and locks, may be on their list of needs and expectations.

Many storage facility owners do not fully understand the complexity of insurance and the problems that can arise from a poorly designed insurance program. So how does one navigate the insurance mine field? The following points can help guide a storage owner into selecting the best program to fit his needs.

Choosing the Right Company

Select an experienced insurance broker you trust and who understands the self-storage industry. Insurance brokers are not unlike other professionals in that some specialize in servicing specific industries and have programs developed to meet the unique needs of a given industry. An industry program may include specialty coverage, competitive pricing, knowledgeable claims adjusting, fewer potential gaps and generally makes the decision process easier. You might also consider requesting references from clients of that broker, preferably with some claims experience.

Make sure the insurance company you select is financially stable, able to meet its commitments and in for the long-haul. Like any other business, insurance companies can fail. In fact, there have been several failures in recent Canadian history. Failure of an insurance company may result in unpaid claims, reduced claims payments and even lost premiums. They should also be committed to the industry to ensure they will be supportive during the good and bad times.

Define the Insurance Terms

Make sure the tenant’s insurance coverage is not linked to your storage contract. Insurance companies and insurance brokers are heavily regulated, and the rules and requirements for doing business in a given province or territory are well defined. At a very basic level, insurance for your tenants must be in the form of a contract between the tenant and the insurance company. The tenant agreement cannot legally contain the promise to pay an insurance claim to the tenant, as the self-storage facility is not an insurance company.

There is also the issue of an insurance company pulling the plug and retreating from a class of business. This situation could leave a storage facility holding the bag forcing it to honor the terms of the tenant agreement. The result could spell financial disaster in the event of a significant claim.

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