The Value of Self-Storage Tenant Insurance: Peace of Mind, a Better CX and a Fresh Revenue Stream

Thanks to the protections established within the self-storage rental agreement, facility operators aren’t responsible for theft of or damage to tenants’ stored property. If your property managers are doing their job right, your customers are clearly told this at the time of rental. However, many renters will forget; and if they suffer a loss, they’re often surprised when they’re reminded of this fact.

To help ease the difficulty of these situations and avoid unpleasant interactions with customers, it’s wise to require that tenants carry some form of insurance. The trouble is most homeowner’s and renter’s policies aren’t a great solution. The deductibles are often quite high, and they sometimes limit or exclude coverage for off-site property.

The perfect answer can be offering a tenant-insurance program at your self-storage facility. This product financially protects your customers’ stored goods and provides peace of mind. For a monthly fee, your renter gets coverage for their items in the event of a loss, up to the agreed upon amount. If an incident occurs, they file a claim and deal directly with your provider. The cherry on top of this cake is that you as the facility operator enjoy a portion of the revenue created, which creates a fresh new profit center for your operation.

Let’s look at some of the key elements to choosing a tenant-insurance program and things you should know about implementation.

Factors to Choosing a Program

Having the right tenant-insurance product in place can positively impact your self-storage facility’s customer experience, thereby boosting loyalty and retention. However, there are many programs available within the industry, and they aren’t all the same. In fact, there can be significant differences between them. To help you choose a product that’ll be a good fit for your customers and business, let’s discuss a few of the finer points.

Coverage needs. First, it’s important to consider your self-storage facility’s features and location along with any prior incidents resulting in tenant claims. In short, you need to analyze your business strengths and weaknesses. For example, if your property is near a body of water, you may want to consider a program that provides flood coverage for stored property. Ask potential providers what exposures they cover and at what levels.

Customer service and claims filing. Consider each provider’s infrastructure and process. Suffering a property loss can be devastating to tenants. How your insurance company handles a claim isn’t only a reflection of their product but, by extension, the quality of your self-storage operation. Today’s customers expect convenient service as well as personalized and timely response. So, take note of each provider’s business hours. Do they have an experienced and professional claims team? What technologies do they use?

Legal aspects. Insurance is a heavily regulated business, often with complex licensing and compliance requirements. Laws are constantly changing, and they vary from state to state. Thus, it’s important to select a tenant-insurance program with an administrator who’ll help you navigate these waters in every state in which you operate.

Marketing. How you market your tenant-insurance program often depends on conditions outlined by the administrator; however, they’ll often provide you with useful brochures, FAQ (frequently asked questions) documents and signage. They should also help you send announcements to existing tenants and introduce the new offering.

Enrollment. Some tenant-insurance programs require new self-storage customers to either provide proof of private coverage or elect their product at the time of rental. Others provide an at-will option to enroll. Some will even integrate with your facility-management software and may have unique onboarding processes.

Depending on the provider, they may have an option for automatic enrollment in which the premium is waived by the insurance company for the first 30 days. This approach can be a nice marketing touch and helps simplify the buying process. The main consideration is helping the customer determine the right coverage for their needs.

Revenue Potential

For many self-storage operators, the big question is how much revenue they can generate by selling tenant insurance. Each provider may offer a different compensation plan. The key is to understand the parameters under which you’ll be paid. You’ll want to know the rate structure as well as any obligations, expectations and applicable licensing requirements to help you choose a program your operation can support.

For example, if the payment structure is based on sales, how are you required to sell the insurance, and are you fully licensed and compliant in your state? You also must consider if you have the staff to support the sales process and complete transactions. Alternatively, payment may be based on occupancy. In this scenario, you’ll likely be compensated based on the offer of insurance, not individual sales.

Offering a reputable tenant-insurance program tells your self-storage tenants that you value their business. You’re providing an option for coverage that’ll provide protection and peace of mind while their property is stored at your facility.

Marshann Varley is president of PSCC Inc., a wholly-owned subsidiary of Public Storage Inc. that offers the Savvy Storage Insurance Program. Designed with the customer experience in mind, the product includes dedicated support to help self-storage owners with onboarding and implementation. For more information, call 800.784.1290; email [email protected].