The Camp Fire. Flooding in the Midwest. Texas hail storms. Superstorm Sandy. Hurricanes Harvey, Irma, Katrina and Maria.
Many disasters threaten lives and property and are impossible to prevent. But while self-storage operators may be helpless to stop severe weather or hold back a flood, they have the power to prepare and take steps to minimize the potential impact of these events. In many cases, emergency planning could be the deciding factor in whether your business survives a catastrophe.
The most commonly seen natural perils are earthquake, fire, flood, hail, hurricane, sinkholes, tornado and windstorm. Man-made disasters include crime and bodily injury. Cybercrime, once uncommon, is growing in frequency and severity at an alarming rate. With so many dangers, how do you prepare?
Creating Your Plan
The smartest course is to write a disaster plan, review it annually, provide ongoing and documented employee training to reinforce the plan, and share the plan with first-responders. Your state's self-storage association may offer a template to help you get started. Additional resources are available from the Federal Emergency Management Agency, the Occupational Safety and Health Administration and the National Weather Service. It's also wise to work with your insurance agent and attorney to fully develop and customize your plan.
Give some thought to the information and materials you might need in the event of a disaster. You must consider the physical safety of employees and customers, focusing on emergency supplies, contacts and communication, technology and data protection, insurance, and post-event protocol.
Assemble a kit containing items you might need in an emergency such as first-aid essentials, tarps, flashlights, batteries, whistles, a battery-operated radio or television, back-up generators, cases of water, non-perishable food items, a cell phone and spare keys for vehicles. More personal items include identification, sturdy shoes, spare glasses, prescription medication and other necessities.
Contacts and Communication
First, create a handy document containing the information you might need in the event of a catastrophe. This might include:
- Contacts for local authorities and medical facilities
- Contacts for facility ownership, staff and tenants
- Contacts for your insurance agent (plus your policy numbers)
- Contacts for vendors to assist with restoration, debris disposal and repairs
- An evacuation route and destination
- A shelter plan (in case you’re stuck on site)
This file should be kept in a safe, easily accessible place. Print a hard copy to keep on site and consider posting a digital copy online. Once a weather event is announced, you can even carry a copy on your person. Also, keep your active insurance policies in a protected place where they can’t be destroyed, such as a safe-deposit box.
If your facility sustains significant damage, you’ll need to keep employees and tenants informed about closures, safety considerations and recovery of stored belongings. Give some thought to how your response to a disaster could affect your reputation within the community. Plan for potential communication on social media and to local media outlets.
Technology and Data Protection
Your disaster plan should include a routine data back-up to an external hard drive, flash drive or the cloud. To minimize the risk of cyberattack, use high-strength passwords, encrypt website pages and restrict user access to data. Human error remains one of the primary reasons for cybercrime. Training is a critical factor in mitigating it.
Insurance and Claims
Does your insurance policy cover business interruption? Are you covered in the event of a catastrophic loss? What are your potential out-of-pocket expenses? Schedule a coverage review with your agent to discuss disaster- and storm-related exposures and confirm your policy reflects appropriate property values and coverage limits. If it specifies replacement with materials of like kind and quality, ask your agent to explain how that may affect potential repairs in the event of property damage.
Here are the coverages that provide critical protection in the event of a disaster:
- Property and liability: Includes business property, building ordinance, business income, general liability and umbrella
- Building ordinance: Covers loss to the undamaged portion of a building and its demolition, and the increased costs of construction to rebuild in compliance with current codes
- Business income: Covers the actual loss of business income sustained due to direct physical loss and provides cash flow while rebuilding
- Wind and hail deductible buy-back: Decreases the owner's out-of-pocket financial exposure by lowering the wind and hail deductible to as little as 1 percent
- Specialty: Includes sale and disposal liability, customer goods legal liability and limited pollutant removal
Once the immediate threat has passed and you’ve surveyed the damage, it’s time start the claims process. You can report a claim to your agent or directly to the carrier, but only report each claim once. If you work with an agent, it’s good to report to him directly.
When you make your report, you’ll need to provide your business name, address and phone number; contact information for the policyholder and/or representative; the insurance policy number; the date, time and location of the loss; and a brief description of the damage including specific building addresses. For liability claims, provide a brief description of the incident as well as names, addresses and phone numbers of witnesses. A claims representative will contact you to inspect the property.
It’s vital that claims be reported as quickly as possible to ensure the best resolution. The potential consequences of failing to report a claim quickly include the disappearance of evidence and witnesses, delay in resolution, and potential lawsuits against the self-storage business. If your policy stipulates a timeline for reporting claims, failure to comply may void the contract.
In the event of a storm or other disaster that causes property damage, many business owners in the area are going to seek the services of vendors (restoration companies, disposal services, tree trimmers, etc.) to perform repairs and clean-up. Materials and labor may become scarce, and you could wait a relatively long time for service. Identify the suppliers you may need in advance and discuss their ability to access materials and provide service in demanding circumstances. You may be able to secure a priority position for response. Whoever you hire, make sure they’re licensed and insured!
If your property suffers damage, there are a few actions you may wish to take to secure the property and prevent further injury. Most important, ensure your own safety as well as that of employees, customers and the public at large. If your building isn’t stable, don’t enter it or allow anyone else to. Notify staff and tenants of closures or restricted access via e-mail, text or phone. Identify any downed electrical power lines or damaged gas lines and notify the appropriate authorities as soon as possible.
You don’t need to wait for the insurance claims adjuster to start documenting the scene, so take photos and videos that show the damage. Make an inventory of lost and spoiled items. Most insurance companies will cover reasonable and necessary emergency repairs that safeguard your property from further loss. Keep detailed records of your expenses and retain receipts for supplies you purchase and any work accomplished by a vendor. Finally, don’t discard any item before checking with your claims representative.
Natural and manmade disasters can be destructive and deadly, and they usually require a lengthy and costly recovery. While you can't prevent most of these events, you can avoid being caught off guard. Protect your employees, customers and business by taking steps now to be prepared for a future emergency.
Mike Schofield is president and CEO of Phoenix-based MiniCo Insurance Agency LLC, a provider of specialty insurance products and publications for the self-storage industry since 1974. MiniCo has recently upgraded its self-storage business owner policy and supporting solutions to provide expedited service and enhanced protection for policyholders. For more information, visit www.minico.com.