A discussion on self-storage emergency preparedness for catastrophic loss would not be complete without focusing on insurance. One of the main reasons you purchase insurance is to reduce your losses when catastrophe strikes. Having adequate limits and proper coverage is part of the protection you will need. A good starting place is to understand what catastrophe exposures you face and what insurance is available to help you control losses from them. What protection you choose may be different than another facility owner. You can also choose to take actions that will reduce your exposures.
Up in Smoke
Nationwide droughts, lightning and other sources are generating large wild fires in areas not usually afflicted. Plus, areas often hit by wildfires are experiencing them in larger magnitude. Fires that consume brush and forest areas pose great catastrophic potential. They move through acres in a matter of hours, consuming everything in their path. The volatile nature of these fires creates an exposure that insurance carriers monitor carefully.
When evaluating clients’ properties, insurance companies inquire about the construction and age of structures and the fire-fighting capabilities near the location. While you can’t change the construction of your buildings or move the fire department closer, you can consider reducing the fire load of your buildings when maintaining and updating your buildings.
One of the easiest things you can do is clean any gutters and remove tree limbs and leaves from your premises. If you are situated in a densely covered brush or forested area, or even an area with dry grass, you’ll need to pay greater attention to removing the surrounding vegetation. Talk with your local fire department about how much vegetation to remove, particularly in the spring when growth begins.
Weather or Not
With much of the U.S. population living a short distance from a coast, exposure from wind and rain due to tropical storms and hurricanes are a major source of catastrophic loss. At this time, the insured losses from Hurricane Ike, a category II storm, are approaching $20 billion, making it the third costliest windstorm in U.S. history. Those who live and work in these areas are well aware of the risks and the requirements to protect their property when a storm approaches.
If your facility is located in an area prone to severe storm activity, your insurance company will limit its coverage and you must assume part or all of this exposure. Some policies exclude wind coverage, which means you may need to purchase a separate policy from another company to provide this protection. In areas where windstorm is a frequent cause of severe property loss, many insurance policies have a separate wind deductible that is higher than your property deductible for other causes of loss. This deductible can be written as a flat amount or a percentage of your property values.
From the insurer’s point of view, the higher deductible serves two purposes. First, it keeps the premiums somewhat lower. Second, it encourages you to take steps to lessen the amount of loss. Have your insurance agent explain how the deductible would apply when you are purchasing insurance.