By Anthony Domenici
Tenant insurance provides self-storage operators with an opportunity to increase sales and provide a valuable service to customers. So why do 35 percent of storage sites in Canada fail to offer this revenue-generator?
Canada facility operators have three options when it comes to tenant insurance. Lets explore the advantages and costs of each:
Insurance with rental fee. With this type of tenant insurance, the fee is rolled into the storage rental price. The cost is usually between 75 cents and $1.50 per $1,000 worth of stored goods per month, plus your facilitys administration fee. This system can be expensive and involves proactive selling to the customer.
A locker fee. The average cost of this insurance is $2 per month for up to $25,000 of coverage per locker. Your site pays this amount to the insurer charges the tenant an administration charge, putting the customers cost at about $8 per month. This product is a simple sell but is designed for secure sites, and the security at your facility will be a consideration by the insurer. Many sites have implemented this method as mandatory.
Self-insuring customers lockers. This is an interesting option. Its not insurance, its a convoluted form of offering protection. The fee collected is yours to keep, however, there are two major concerns. First, if there was a catastrophe, youre on the hook for a potentially large payout. Second, the protection, wordings and limits are usually inferior to the insured program.
The first two insurance options mentioned above are the norm, while the third is often offered by large, multi-site operators. They all represent an additional service you can provide to every customer who walks into your facility. Your insurance broker can provide a point-of-sale brochure you can give to your customers. In addition, you should highlight your tenant-insurance program on your facility website.
Your self-storage site should operate at what is called insurance neutral. For example, if your facility premiums are $5,000, you should be creating income from the sale of tenant insurance that, at a minimum, offsets this cost. In fact, selling tenant insurance should be treated as a profit center. If youre not offering an insurance option to customers, consider the following.
Q: Why would I want to get involved with the sale of insurance?
A: Because your competitors are likely offering this service to their tenants. Tenant insurance protects your business and your customers stored belongings.
Q: Our employees dont understand the coverage, so they wont discuss insurance with customers.
A: Most insurance providers will meet with your staff to review wordings, limits and exclusions. At the same time, theyll provide guidance for asking customer questions and offering solutions.
Q: This is too much work!
A: Ask your tenant-insurance provider what other sites are experiencing and how offering tenant insurance to their customers has added revenue and increased occupancy.
There are a few insurance brokers that have designed insurance programs specific to the self-storage industry. These brokers have knowledge of insurance but, more important, they understand your needs. Your site is likely a sizable asset, so choose one of the exclusive programs and deal with an insurance broker who will help build your business.
With 30 years of experience in the insurance industry, Anthony Domenici is the managing partner at Tripemco Burlington Insurance Group Ltd., an advice-based insurance brokerage that specializes in commercial insurance in Canada. He designed the Just Storage Exclusive Insurance Program. For more information, visit www.tripemco.com .