Protecting a Self-Storage Business From Property Loss and Liability Exposure: Insurance Coverage Limits and Exclusions

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Liability Coverage

One source of liability for self-storage owners that’s moving up on the industry’s radar is the need for compliance with the Americans With Disabilities Act (ADA). Title III of the ADA of 1990 prohibits private entities from discriminating against individuals with disabilities by maintaining places of business that are not physically accessible.

The application of this federal law to storage facilities is not new. Special consideration for access by disabled persons has been important in consideration for all new construction and renovations since 1993. New Title III ADA regulations issued in July 2010, which became effective in January 2012, have increased the responsibility of self-storage owners and their exposure to litigation.

It’s especially important for storage operators to be aware of ADA requirements and take appropriate measures to bring their facilities into compliance. Lawsuits brought by individuals or public-interest groups for failure to comply are not covered by a self-storage owner's liability-insurance package.

In addition to examining your ADA exposure, consider your liability exposure during renovations, repairs, maintenance or new construction on your premises. To help determine if you have adequate limits when hiring contractors, ask what limits of liability they carry in their insurance policies. You should also obtain certificates of insurance from any workers at your site. This will verify their insurance. Your agent might also recommend some changes that you require from their insurance, such as increased liability limits or naming you as an additional insured.

Another consideration is the insurance required if you offer vehicle storage or other types of services such as wine or records storage. You may also rent space to other businesses. What is the nature of their operation, and does it affect your business liability? Discussing these issues with your agent will ensure your policy and insurance carrier are covering you for these additional exposures.

Other Considerations

In addition to the above, you must consider other business coverage, such coverage for tenant's stored goods. Do you require that all tenants have their own insurance? Your customers may rely on their homeowner’s insurance to provide protection for their stored property, which may not be adequate.

Outside your rental agreement, you can add a service to assist tenants with protection, or you may have storage-insurance resources available for them at your site. But what if a tenants comes to you after a loss? Is your limit for customers' goods legal liability adequate? Consider what could cause an occurrence and how many units could be affected.

You should also consider your business lien practices. What limit do you carry for sale and disposal liability? You know that once your tenant’s goods have been sold they become priceless. Many claims presented by tenants after a lien sale are due to a mistake made during the lien process. You should review the deductible with your insurance agent and make sure you have adequate limits.

Maximizing your insurance coverage takes work on your part. A regular review of your operation with your insurance agent will ensure your policy coverage is up to date with your business and keeps you aware of things not covered by the insurance contract—items you may be responsible for if a loss occurs.

To protect your business with the most suitable insurance, work closely with your agent to consider all aspects of your business, and understand how your policy coverage, limits and exclusions protect your self-storage operation.

Kay Schaefer is the senior underwriter for Deans & Homer, an insurance managing underwriter providing specialized coverage for the self-storage industry since 1974. Schaefer has more than 30 years of experience writing unique insurance coverage. For more information, call 800.847.9999; visit www.deanshomer.com.

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