Fortunately, the majority of self-storage operators emerged from Hurricane Irene relatively unscathed. Still, being prepared for any kind of natural disaster should be a top priority for every facility. “Having a disaster plan in place is critical,” Halverson said. With so many company members—from executives to property managers—communication was critical for Extra Space Storage before, during and after the storm. “One thing we tried to do this week was be in daily contact with our customers,” Halverson said. Customers were e-mailed updates about any damage or flooding, and when they’d be able to access the facility. “It’s really important to keep the flow of information going at all levels,” he added.
All but one Extra Space Storage facility had a property manager at the facility the day after the storm, another important component of the company’s emergency plan. The managers assisted customers, assessed damage at the property and maintained facility security. “Everyone knew what they were responsible for and they were all prepared,” Halverson said.
Matthew Van Horn, vice president of Cutting Edge Self-Storage Management, found out firsthand how critical a disaster plan can be when a tornado ripped through the small town of Joplin, Mo., on May 22. While the facility the company manages only suffered some cosmetic damage, Van Horn and the facility manager followed the company’s disaster plan. “Preparation and organization are the two things that will help you better handle these situations,” Van Horn said.
Even self-storage operators who are not located in areas prone for natural disasters should have a detailed, written disaster plan in place, advised Randy Tipton, owner of Universal Insurance Facilities Ltd., which provides specialized insurance coverage to the self-storage industry in 49 states. “Facility owners need to communicate with their staff regarding plans for evacuation, personal safety and damage assessment along with business restoration,” she said. This includes backing up all electronic records and keeping a copy in a safe at an off-site location. “During a storm, protecting sensitive electronics like computers and DVRs with plastic sheeting can also help keep them from getting water damage,” Tipton said.
Unfortunately, much of the damage caused by Hurricane Irene may not even be covered by tradition insurance policies, leaving many homeowners and business owners facing great loss. “This recent disaster is a perfect example that not all claims are covered,” Tipton said. “If there is coverage, the right type of policy needs to be in place, and there isn’t an insurance policy that covers all losses.”
This may include power failures, which is never covered, and flood damage, an excluded coverage on most policies but one that can be purchased as a standalone policy. However, few business owners buy flood insurance even though it’s reasonably priced. “Many business owners feel it’s a risk they’re willing to take because they aren’t located in a flood zone,” Tipton said. “As seen by this last storm, a property didn’t need to be located in a flood zone to suffer extensive flood damage.”
In addition, if the power’s out, a business can’t operate. And a closed business cannot generate revenue. While business-income coverage can be a critical part of a business-insurance policy, Tipton noted it’s only triggered if property damage to the facility causes the business interruption. “Many businesses that were affected by Hurricane Irene were unable to open their doors for days due to power outage, but won’t have coverage because their property was not damaged,” Tipton said.
Tipton suggests business owners regularly review their insurance policies with their agent to ensure they have all the coverage they need. They should also be aware of the self-storage industry’s unique insurance needs. “When it comes to insurance, a facility owner is best served by an industry insurance specialist,” she said.
Several facilities are already reaching out to their communities, offering free storage to victims of Hurricane Irene. Before the storm, U-Haul International offered 30 days of free self-storage at 13 of its facilities. Mansfield Self & RV Storage in Mansfield, Conn., is promoting the same deal, as is Universal Management and Extra Space Storage.
Many self-storage operators in the affected areas are already seeing an increase in occupancy levels—both before and after the storm. Halverson recalls what happened in storm-ravaged Florida just a few years ago. “Historically, we’ve seen an increase in revenue in areas that have been hit,” he said. However, while catastrophic, Hurricane Irene’s impact may not be as far-reaching as that of the Florida storm. “We’re also in a different economic situation in this country than we were then,” Halverson said. “What the impact will be, we don’t know yet.”