Choosing Your Insurance Professional

Most of us are familiar with the process of buying insurance, having purchased it for our homes or vehicles. But commercial coverage is a horse of a different color. When it comes to protecting your business, how do you choose the right professional to assist with your insurance needs? It can be difficult and confusing, but its a critical process. After all, when youre attempting to guard your assets against risk, you want to get it right the first time.

Insurance companies can provide coverage in a variety of forms. They can write a business owners policy (BOP) that rolls several coverages into one (theres a standard BOP form for self-storage, but not all companies use it). They can write their own version of a package policy for small businesses. Or they can write individual policies for property and liability, and try to cover your needs with endorsements that extend coverage.

Insurance companies must be financially strong, as determined by their industry ratings. A.M. Best is one of the most highly regarded insurance-rating services, and the company you choose should have an A.M. Best rating of A or better. This indicates the company is financially solid and has a good reputation in the marketplace. Your provider should also be known for fair and fast claims services.

Provider Options

When buying insurance, you have several options. You can work with an independent agent, a direct-write agent or a broker.

An independent agent has a contract to act on behalf of several companies, each with its own appetite to write certain kinds of insurance. He will review your needs, offer advice, and provide coverage from these suppliers. A large part of his job is to regularly evaluate your policy and ensure you have adequate protection. (At each review, he should check to see if you have added or improved buildings.) The agent you choose should not only have a strong working relationship with the companies he represents, he should know the advantages and disadvantages of each policy type.

A company, or direct-write, agent works for just one insurance carrier, offering only its available coverages. He has direct access to the companys resources, which sometimes results in faster service.

Brokers are independent professionals who represent insurance buyers rather than companies. They usually have working relationships with several insurers and often do comparison shopping for their clients.

Finding Candidates

You can find insurance carriers in a number of ways. The local Yellow Pages is a good place to start, though it wont provide any feedback as to each providers competence. Self-storage operators, however, are a great source of referrals. Ask others in your area which companies they use. You can also find good candidates at industry conferences and tradeshows, where they may be presenting seminars or exhibiting. You can even ask vendors of other industry services which insurance providers have a good reputation for customer service and knowledgeable staff.

Choosing Your Insurance Partner

Before choosing an insurance professional to assist you, consider these key factors: Familiarity with self-storage is critical. From an insurance perspective, this industry is unique. Beyond the usual concerns regarding property-damage loss, there are significant legal issues involved in the tenant-landlord relationship. As a storage operator, you are not a warehouseman, meaning you do not have care, custody or control of customers goods. This relieves you from most liability, but there are other risks. The agent or broker you choose must understand this and be aware of the coverages that specifically address industry exposures (see sidebar).

A good agent or broker should be able to help you decide what coverages you need as well as recommend the limits of liability you should buy and what deductibles to accept. Professional designations such as certified insurance counselor (CIC) or chartered property and casualty underwriter (CPCU) help indicate a professionals qualifications. They usually identify those who place a high value on insurance training and knowledge.

While cost of coverage is important, the premium should not be the No.1 reason you choose an insurance provider. Consider the company being represented, how many self-storage businesses it supports, and the services it can offer. Some of those services should include:

Choosing an insurance professional comes down to how comfortable you are with a broker or agent and how confident you are in his ability to secure the protection you neednow and as your business grows and changes. A trusted advisor should be an important member of your team. After all, youre an expert in your business. Isnt it worth the time and effort it takes to find one in the insurance market too?

Toni Bader is vice president of marketing for Bader Co., a national provider of point-of-lease self-storage tenant insurance. Via its commercial-insurance division, the company offers business owners insurance through companies rated A or higher. For more information, call 888.223.3726; visit www.baderco.com.

Self-Storage Coverages

If you own or operate a self-storage facility, there are several insurance coverages you should know about and understand:

Customers goods legal liability.

As a landlord, you only rent space. Most self-storage leases clearly state that you are not liable for any loss or damage to tenants stored goods. But you still need protection in case youre ever taken to court or found to be negligent in the operation of the facility. Customers goods legal liability pays the cost to defend you against lawsuits and judgments.

Sale-and-disposal legal liability.

Storage operators face legal risk when they sell a tenants property at auction to satisfy past-due rent. Mistakes are sometimes made during a lien sale. For example, perhaps the manager overlocked the wrong unit or failed to notify the tenant according to the state lien law. In any event, this type of coverage helps defend you in case of a lawsuit and, again, pays for any judgments against you.

Extended business interruption.

In general, business owners policies include coverage for extended business interruption, but some insurance companies offer wider benefits than others. Make sure your policy includes enough protection to help you get back in business after a disaster such as a hurricane. Youll need enough time to gather equipment and make repairs, and then restart your business and refill your units.