Tennessee Gov. Bill Haslam recently signed parallel bills (House Bill 0980; Senate Bill 1147) that solidify the ability of self-storage operators to sell tenant insurance to customers. The law goes into effect July 1 and enables operators with a limited-lines license to offer tenant insurance on a month-to-month or other periodic basis. The Tennessee Self Storage Association (TNSSA) and national Self Storage Association (SSA) have been working with lawmakers on legislation since February.
“Before the passage of the new tenant-insurance law, Tennessee self-storage operators were in a gray area, not knowing whether they legally could or couldn’t offer insurance to tenants,” said Sherry Cole, legislative chair for the TNSSA. “The TNSSA sponsored this law to remove that doubt and ensure that facility owners could apply to the state for a limited license and then legally offer tenants insurance on their property stored at the owner’s facility.”
Operators who offer tenant insurance must disclose to customers that coverage could duplicate policies they may already have. They must also allow customers to cancel enrollment for coverage at any time, refunding any applicable unearned premium. Operators may not require that tenants purchase insurance to rent a unit. Violations of the law carry fines up to $500 for each offense, with a maximum fine of $5,000.
“Applying for the limited license is an option for operators, and as important, the purchase of this insurance is also an option for every tenant,” said Cole, who is also owner of Storage Plus, a family-owned facility in Murfreesboro, Tenn. “Storage facilities cannot mandate that a tenant purchase the insurance being offered.”
The TNSSA began legislative discussions with the SSA last year, securing financial support and guidance before drafting the initial legislation, Cole said. After finding sponsors in the House and Senate, parallel bills were introduced in February.
“Tenant insurance is a niche area; the agents who write homeowner’s insurance don’t write it. Our legislators understood that and the importance of making sure our tenants could get the contents coverage they need,” she said. “As we went through the legislative process, our members, board and vendors responded enthusiastically to every call to action by sending e-mails and making phone calls to legislators. As a result, we had no opposition—not even one ‘no’ vote!”
Tennessee joins Oregon as the most recent states to add self-storage tenant-insurance laws. Connecticut, Georgia, Maryland, Nevada and Oregon also recently updated their self-storage lien laws. Legislative activity has been busy through the first five months of 2013, with at least 14 states making progress toward updating self-storage regulations.