A common issue facility owners see is water damage to contents, with the tenant claiming the storage operator is at fault. This coverage will pay the legal defense costs and damages for legal liability up to policy limits. In theory, it’s designed to pay a tenant only when the storage operator or employees are negligent. Typical limits available for this coverage range from $100,000 to $5 million depending on the number of units within a facility and the estimated value of the tenant’s contents.
One good way to mitigate this risk is to actively educate and inform renters about tenant insurance. This broad form of coverage allows tenants to cover their own property and goods for most losses at affordable rates and low deductibles. It’s an excellent way to avoid disputes and legal actions regarding liability for damaged or lost property. It also provides peace of mind for facility operators, employees and tenants.
Most tenant-insurance programs allow tenants to choose the appropriate limit for their contents in storage. It’s common to see the limits range from $2,000 to $30,000, and sometimes higher limits are available.
This specialty coverage addresses tenant-contents abandonment. It’s designed to handle proper removal and disposal of environmentally sensitive or dangerous substances abandoned by a tenant. Again, it will cover costs associated with removal and disposal up to the policy limits and subject to policy terms and conditions.
To reduce this risk, self-storage professionals should have standardized rental-agreement language that prohibits storage of flammable, combustible, corrosive, toxic, unstable, explosive or poisonous materials. The agreement should also restrict activities of a hazardous nature, such as welding or woodworking. Many storage facilities are now incorporating surveillance cameras with digital recording as another way of monitoring the activities of their tenants.
Finding the Right Coverage
While these specialized insurance coverage options are vital to self-storage, owners should also consider comprehensive property, liability, business income/interruption and crime-protection insurance tailored to their facility’s specific needs. Issues like crime, personal injury of tenants on site, and fire and water damage also need to be addressed through a comprehensive risk-management and loss-prevention program. This kind of program should be one of the value-added factors your insurance broker provides.
In fact, self-storage professionals should consider several factors when looking for the right insurance partner for their unique needs. These include:
- Qualified assistance in evaluating exposures operators face
- Advice on how best to manage risks from physical facilities and through contracts
- A simplified underwriting process for securing quotes for coverage
- Broad coverage, competitive rates and low deductibles
- Services tenants can access to obtain insurance coverage on their unit contents
- Access to risk-control services to assist in mitigating physical risks on site
- Industry experience and expertise
- Reputable and financially secure insurance company and brokerage
Your self-storage facility is unique in its possibilities and risks. Your insurance solution should reflect that uniqueness and respond with a clear understanding of your exposures and specialized coverage that fully protects your facility.
Toby Struewing, commercial account executive for Cowan Insurance Group, is a specialist in Canadian self-storage business insurance. To reach him, e-mail email@example.com.