Selling Tenant Insurance in New York

Tenant insurance is a staple of self-storage operation. Though facility owners are not liable for loss of or damage to tenant goods in storage, their ability to offer insurance coverage for that property gives everyone peace of mind. The discussion of insurance with a new customer allows the manager to address critical points of the rental agreement that relate to liability. And while purchasing coverage may not actually make the customers’ goods any more secure, he can at least rest easy that he has some recourse should something happen, whether that be theft, fire, flood, etc.
 
Self-storage operators in New York got a bit of a blow last week when Governor David Paterson vetoed Senate Bill 3577, an act that would have amended the insurance law and ultimately allowed them to offer tenant insurance. (See "New York Governor Vetoes Self-Storage Insurance Legislation.")

One of the organizations taking credit for dissuading the governor is the Council of Insurance Brokers of Greater New York Inc., an association of independent insurance brokers throughout Metropolitan New York as well as Long Island and the Lower Hudson Valley. Yesterday, the group published a release praising and thanking the governor in his decision. Its reasons for opposing the bill?

CIB President Anthony Aquilino said the act would only benefit self-storage owners and could adversely affect customers who may already have coverage under their homeowners or renters policies. His legislative chair, Anthony Calafiore, added that CIB has consistently opposed efforts to offer limited insurance licenses, emphasizing the importance of education and regulation in regard to insurance sales.

Unfortunately, the governor concurred. In his letter to the Senate, he cited four policy and technical concerns behind his disapproval:

1. Consumers are often unaware as to whether their goods in storage are covered by their homeowners or renters policies, and so they may purchase insurance from the self-storage company unnecessarily.

2. The bill does not require self-storage operators to file their insurance brochures and materials with the Department of Insurance for review.

3. The bill does not amend other insurance law that outlines requirements for the cancellation and non-renewal of insurance policies. If left unamended, the law would not provide appropriate protection for self-storage customers and could cause unnecessary confusion, error and expense.

4. The bill provided for an immediate effective date, which would make it very difficult for the Department of Insurance to appropriately implement its provisions.

Thankfully, not all states have faced these same challenges. Limited insurance licensing legislation has been passed in 10 other states, including California, Florida, Illinois and Texas. New legislation was passed in Washington state just a few weeks ago. And I understand that the New York Self Storage Association as well as the national Self Storage Association may consider renewing their efforts on this front during the next session.

What do you offer by way of insurance at your own facility(ies)? In a brief poll conducted on the Self-Storage Talk forum last August, 43 percent of respondents said they offer insurance brochures at their counter; 34 percent offer pay-with-rent insurance; 20 percent said they don't offer insurance at all.

If you're interested in learning more about offering tenant insurance, check out these articles:

I particularly encourage any New York self-storage operators or representatives of the NYSSA to chime in on this topic. How do you feel about the veto, and what does it mean for self-storage operation in your state?