Recovering From Facility Fire

Most business owners don’t think about secondary damage. In addition to the physical damage from the fire, you can expect some cleanup of pollutants as a result of firefighting methods.

Recently, a blaze started in a storage unit containing various unknown household chemicals, plastics and rubber tires. During the effort to put it out, the run-off water carried the chemicals to the property adjacent to the self-storage facility. The neighboring property owner filed suit for property damage, including damages related to a delayed pending sale of the property.

There is also the consideration of lost income that ensues after a loss. Most times, a facility suffers loss of business income during the reconstruction as well as supplement income as the property rents up after the project is completed.

How can you protect yourself from the consequences of fire? The answer may be obvious: proper sign-in procedures and a well-written lease agreement. However, your most valuable tool in protecting your facility and assets is insurance.

Fire is a covered cause of loss on almost every insurance policy. Make sure your facility is adequately insured for replacement cost. Be comfortable with your deductible since this is your out-of-pocket expense in the event of a fire.

Look for an insurance provider that will provide blanket building coverage without a co-insurance clause. Business-income coverage is often available on an “actual loss sustained” basis. Make sure you receive an extended period of indemnity to provide coverage after construction is complete and the facility is in the rent-up stage.

Pollution cleanup is normally included for a limited amount on most insurance policies and will provide coverage for cleanup from a covered cause of loss.

In the example above, there would be a “sub-limit” available for the cleanup of pollutants at the facility. This limited amount would not have provided coverage for the damage to the adjacent property or the legal defense of the suit brought against the facility.

This facility had a pollution-liability policy that provided third-party liability, legal defense and pollutant cleanup removal.

The claim resulted in a payment of more than $415,000, most of which would not be covered without this highly specialized pollution-liability coverage.

Don’t let your business get burned. Protect your facility and assets properly by securing insurance protection designed with self-storage in mind. 

Randy Tipton is the owner of Universal Insurance Facilities Ltd., which has provided specialized insurance coverage to the self-storage industry for more than 12 years. Universal has clients in 49 states, with a commitment to providing A-plus-rated service; fast, fair claims handling at an affordable premium; and agents trained specifically in self-storage. For more information, call 800.844.2101; e-mail randyt@univins.com; visit www.universalinsuranceltd.com.