By Kay Schaefer
Disasters can happen anytime, often with little or no warning. The chances that one could affect your self-storage business is higher than you might think. A tornado, hurricane, earthquake or flood that can devastate the natural environment can also shatter your operation.
Many facility operators have fallen into the trap where they think "This can't happen to me," but disaster-recovery and business-continuity planning is very important to every business owner. You need to have a strategy, because in the face of a disaster, your business can go out of business in the blink of an eye. Even a simple approach can be helpful in keeping your operation going after a tragedy strikes. Establish a protocol, and make sure you have the right insurance in place to respond to facility damage.
Any self-storage owner can create a disaster-recovery plan without spending a lot of time or money, even if it's just to get you through small incidents most businesses will face at some point, like a power outage or roof impairment. Start by understanding your risk exposures. The Federal Emergency Management Agency offers a good, free, resource—ready.gov—through which you have access to simple checklists and a disaster-preparedness tool you can tailor to meet your specific needs. This site can also help you determine the likelihood of specific types of events happening at your location.
Begin your plan with knowing how you’ll communicate with people in the event of a disaster. Create a list of who to contact. You’ll want a ready catalog of information for your employees, insurance agent and customers. Talk to your staff about disaster planning ahead of time so they understand their roles and feel comfortable fulfilling their part in the event of disaster.
Remember, the power may be out or the phone lines may be down, so have your contact list available in print as well as digital format. Be prepared for data loss and keep back-ups of this information onsite and off. It’s a good idea to have several types of contact information for each person including a cell-phone number and e-mail address. Once you’ve created this list, keep it up-to-date.
The next list you’ll need is an inventory of your property. Include photos (maybe even video), appraisals and receipts for any new purchases. Also note the make, model, serial number, purchase price and date of any new items. As with your contact list, you’ll want to keep copies of this information onsite and off. Once you have a complete inventory, talk with your insurance agent to ensure you're not under- or over-insured.
Also keep a copy of your insurance policies handy along with your agent’s contact information. Store this in a safe place away from your self-storage facility so these records can be easily retrieved in the event of a loss.
Physically, you’ll want to mitigate your self-storage facility’s exposure to loss or damage. For example, in a hurricane-prone area, this might mean installing storm shutters, covering windows, or checking the siding and roof prior to a storm. In a wildfire area, this could mean clearing away brush from the perimeter of your property. In areas where tornadoes frequently occur, this might mean removing damaged or diseased tree limbs that hang over your buildings.
Talk to your insurance agent about disaster insurance. Some things may already be covered under your existing business-insurance package policy, but some events may not be. For example, earthquake and flood typically aren’t covered. Insurance for these coverages are available under separate policies, but they’ll likely have high deductibles.
If you’re in a high hazard area for wind and hail, your package policy may also contain a separate high deductible or even a full exclusion for these types of events. You may even choose not to purchase insurance for particular events, leaving you self-insured—meaning you’ll be responsible for the costs of clean-up and repair. Knowing what is and isn’t covered will help you better prepare financially for recovery.
Also be aware of any waiting periods for coverage to start. For example, flood policies written with the National Flood Insurance Program are subject to a 30-day waiting period.
Don’t overlook business-interruption coverage in your policy. Talk with your agent about the amount and length of coverage. After a large-scale disaster, resources to repair or replace damaged property may be tight. This can cause delays in getting your business back on its feet.
You’ll also want to have an extended period of indemnity in your loss-of-income coverage. This will extend coverage for a period of time after repairs are complete, giving you time to rent units back up to the same level as before the event occurred.
Filing a Claim
Be ready to file your claim as soon as possible. Call your insurance agent with your policy number and information about what happened and when. Document your process, starting with notes on your conversations and correspondence with your agent and insurance-company representatives. Include their names and contact information, the date and time of each communication, and notes about what was said. Cooperate fully with the insurance company and provide all information requested. Having your inventory and photos is a good start to moving the claim forward quickly.
By preparing ahead of time, you’ll know what to expect after disaster strikes. Have copies of your contact list, property inventory and insurance policies available onsite and off to simplify the process of keeping your business in business. Take steps to minimize your loss. Finally, know what to expect from your insurance coverage and company. All of these things will help you and your business weather any storm.
Kay Schaefer is the senior underwriter for Deans & Homer, an insurance managing underwriter that has provided specialized coverage for the self-storage industry since 1974. She has more than 30 years of experience in writing unique insurance coverage. For more information, call 800.847.9999; visit www.deanshomer.com.