The following is part of an exciting 2013 content series entitled "What Would You Do?" ISS asked managers and owners how they would react in difficult situations that can arise at any facility. We then asked experts to advise on their recommended course of action. To see all articles and slideshows in the series, enter code WWYD13 in the search box at insideselfstorage.com. The complete sequence will roll out over several weeks and be available in full by March 10, 2013.
Self-storage operators never know when a crisis may hit. Whether it's to deal with a fire, a flood or an injury on the property, every facility should have procedures in place to guide employees through the process of responding to an issue with confidence and without increasing the company’s risk.
Good risk management starts by carrying the necessary insurance coverages to protect the self-storage facility and its owners from liability. Although you hope you’ll never have to file a claim, having adequate coverage and minimizing exposure to risks helps to preserve the health of your business. Understanding how to act once an incident occurs can save you and your tenants from additional hardship and expense. Do you know what to do in the face of a crisis? Is what you would do the same as what you should do?
Inside Self-Storage recently reached out to self-storage operators to learn how they would proceed during specific but common situations that could occur at any facility. They were asked, “What would you do if ...”
- A customer refused to buy tenant insurance?
- Your facility experienced a fire, roof leak or flood?
- A tenant injured himself on your property?
Answers were provided by members of Self-Storage Talk, the industry’s largest online community. We then asked industry insurance experts to tell us what operators should do in each scenario. Our insurance experts are Kay Schaefer, senior underwriter for Deans & Homer in Phoenix; and Don Sedlacek, vice president of claims for MiniCo Insurance Agency LLC in Phoenix.
What would you do if a customer refused to buy tenant insurance?
To date, many operators are not mandating their customers purchase tenant insurance. This is true for Richard and Beverly Haessler (RichardandBeverly), resident managers of Park Inn Storage in Odessa, Texas, and Ralph Driscoll (FHARumRunner), manager at West End Self Storage in Richmond, Va., although both said they encourage them to do so on their own. “There is a spot on the TSSA [Texas Self Storage Association] lease where they have to sign, stating it is their responsibility to insure their belongings, and the facility cannot be held responsible for any loss of any kind,” say the Haesslers.
What SHOULD you do?
Schaefer: Tenant insurance should be available and affordable to all self-storage customers for many reasons. While some people focus on tenant-insurance sales as a source of auxiliary revenue, it also serves as a collateral source of legal protection for you and supports the insurance and non-liability provisions of most rental agreements. Finally, it provides an important service to those customers who are storing valuable property and are in need of insurance protection.
It should also be the tenants’ decision about how they want to handle their own risk exposure. If they choose not to purchase insurance, an operator may still reinforce the insurance and non-liability provisions of their rental agreement by offering the tenant access to insurance and by the tenants’ written acknowledgement that they accept the risk without insurance.
Finally, I would note that some customers will have tenant or homeowner’s insurance that they believe will cover loss or damage to their stored property. This is becoming less true over the past few years, as many insurance companies have begun adopting a new “standard” version of the homeowner’s insurance contract that specifically addresses and limits coverage for property in a self-storage facility to $1,000. Such a limit is often far below the dollar limitation that may be included in a typical self-storage agreement for property in storage.
Sedlacek: If someone declines to purchase tenant insurance, make sure the customer understands the full range of benefits included in the policy. No matter how well-trained your staff may be, some customers are still going to decline the insurance. To prepare for this eventuality, you may want to institute a policy requiring all tenants to provide evidence of insurance. If a customer does not purchase the tenant insurance you offer, he will need to give the facility a copy of the declaration page of his homeowner policy demonstrating coverage for items stored in a rented storage facility. The evidence of insurance should be filed with the lease agreement for reference in the event the tenant suffers a loss.