By Keith McConnell
When it comes to insuring your self-storage operation, the choice of coverages can be overwhelming. Plus, there’s more to protecting your investment than the coverages themselves. Property valuation, endorsements, addressing unique exposures or perils, policy terms and conditions, and other specialty programs are important as well. This list outlines the top 10 insurance coverages and considerations that are critical for the protection of your self-storage business.
No. 1—Special Coverages: Customers’ Goods Legal Liability and Sale and Disposal Liability
Specialty coverages are designed specifically to address challenging insurance exposures that are unique to the self-storage industry. Customers’ goods legal liability provides coverage against loss or damage to customers’ personal property for which the self-storage business may be legally liable. For example, this could include damage to a tenant’s belongings caused by rain that entered the unit via an unrepaired hole in the roof.
Sale and disposal liability coverage protects self-storage operations against liability claims by customers for loss to their stored property due to the sale, removal or disposal of the property as a result of a lien sale or other covered cause of loss.
No. 2—Systems-Protection Coverage
One of the inevitable truths of running a business is equipment breaks. The good news is systems-protection coverage—sometimes referred to as boiler and machinery coverage or equipment-breakdown coverage—is widely available to address these types of losses. This coverage commonly includes items such as heating and cooling equipment, computer systems, surveillance equipment, electronic gates, phones, and other systems.
The total insured value of your self-storage business is a critical component of your insurance package. It’s not uncommon for a business owner to request a reduction in his property value to save premium dollars. But leaving your property underinsured is counterintuitive to protecting your valuable investment. The recommended course of action is to insure your facility for its replacement-cost value. Taking that step now can save you from a crippling financial exposure in the event of a catastrophic loss.
No. 4—Umbrella Liability
Let’s face the facts: In today’s litigious environment, the odds of a business owner being sued are uncomfortably high. Just as an umbrella protects you from the weather, an umbrella insurance policy provides additional protection over and above the liability section of your commercial-insurance coverage. In the event of a disastrous claim against you, that extra layer of coverage would provide protection beyond the liability limits of your other insurance policies.
No. 5—Building Ordinance (Building Law)
Building-ordinance coverage offers protection in the event the structures at your facility are damaged to the extent that local building codes or ordinances require the remaining structure be demolished and rebuilt to meet current building codes. Without this coverage as part of your policy at an adequate limit, you face a potentially catastrophic financial exposure in the event of a triggering incident.