Metal buildings and concrete pads are key ingredients of many self-storage facilities. Some owners believe their facility could not, and will not, sustain a loss from fire because metal doesnt burn and the concrete pad cant be damaged. While we wish this were true, its not.
The intense heat produced by a fire can cause metal to distort and concrete to crack, resulting in permanent structural damage. Uncommon as it may be, its not unheard of for both the building and pad to be demolished and replaced as a result of fire damage. Fire is one of the most devastating losses a storage owner will ever experience. The after effects of a fire are even more tragic.
Think about the nature of our business: We allow tenants to empty contents from their homes, garages and businesses and store them at our properties. We protect our facility with a well-written lease clearly stating the renter is not allowed to store hazardous contents in the unit.
The customer agrees to the terms of the lease, signs it (making it a legally binding contract), and heads off to fill your property with flammables. Often, tenants do this unintentionally.
Gasoline, paint and home-cleaning products are all considered hazardous materials that people may not recognize as such. Hence, even the best tenant may be putting your property at risk. Add to that the fire load being placed within the same unititems such as mattresses, boxes filled with old papers, photo albums, etc.and youve got a disaster just waiting to ignite.
As tenants move items in and out, they sometimes break another rule at your facilities: They smoke. There have been countless fire claims that have originated from inside a closed unit, much to the surprise of the tenant and facility owner.
Embers igniting the contents of a single unit could cause considerable damage to your entire business. Most self-storage fires go undetected for awhile until a tenant or facility manager sees smoke or flames billowing from within a structure.
By the time the fire trucks arrive, the unit is in full blaze. Firefighters will first assure peoples safety and then try to contain and extinguish the blaze and smoke. Hoses and axes are brought in. You can expect that all of the units in the building will be accessed as the crews break through the doors with their axes to ensure no fire spots are sputtering in other units. Huge amounts of water and flame retardant will be spewed all over the engaged building and neighboring structures to put the fire down.
Most business owners dont think about secondary damage. In addition to the physical damage from the fire, you can expect some cleanup of pollutants as a result of firefighting methods.
Recently, a blaze started in a storage unit containing various unknown household chemicals, plastics and rubber tires. During the effort to put it out, the run-off water carried the chemicals to the property adjacent to the self-storage facility. The neighboring property owner filed suit for property damage, including damages related to a delayed pending sale of the property.
There is also the consideration of lost income that ensues after a loss. Most times, a facility suffers loss of business income during the reconstruction as well as supplement income as the property rents up after the project is completed.
How can you protect yourself from the consequences of fire? The answer may be obvious: proper sign-in procedures and a well-written lease agreement. However, your most valuable tool in protecting your facility and assets is insurance.
Fire is a covered cause of loss on almost every insurance policy. Make sure your facility is adequately insured for replacement cost. Be comfortable with your deductible since this is your out-of-pocket expense in the event of a fire.
Look for an insurance provider that will provide blanket building coverage without a co-insurance clause. Business-income coverage is often available on an actual loss sustained basis. Make sure you receive an extended period of indemnity to provide coverage after construction is complete and the facility is in the rent-up stage.
Pollution cleanup is normally included for a limited amount on most insurance policies and will provide coverage for cleanup from a covered cause of loss.
In the example above, there would be a sub-limit available for the cleanup of pollutants at the facility. This limited amount would not have provided coverage for the damage to the adjacent property or the legal defense of the suit brought against the facility.
This facility had a pollution-liability policy that provided third-party liability, legal defense and pollutant cleanup removal.
The claim resulted in a payment of more than $415,000, most of which would not be covered without this highly specialized pollution-liability coverage.
Dont let your business get burned. Protect your facility and assets properly by securing insurance protection designed with self-storage in mind.
Randy Tipton is the owner of Universal Insurance Facilities Ltd., which has provided specialized insurance coverage to the self-storage industry for more than 12 years. Universal has clients in 49 states, with a commitment to providing A-plus-rated service; fast, fair claims handling at an affordable premium; and agents trained specifically in self-storage. For more information, call 800.844.2101; e-mail [email protected]; visit www.universalinsuranceltd.com.