December 1, 1997

10 Min Read
Customer Storage Insurance

Customer Storage Insurance

To Good to Be True?

By Alice Cravens

It helps you even if no one buys it.

It helps you to serve your customer while clarifyingresponsibilities.

It helps you to reassure customers if a catastrophe strikes.

It costs you little...or nothing.

Does this sound too good to be true? Can you believe that thisis a form of insurance? Customer storage insurance programs cando all of this for a storage manager. While this type ofinsurance has been around for decades, today's programs havebrought us into a new era of improved coverages and services thathelp to make them more attractive to customers. This article willgive you a comprehensive update on this important service, fromcovering the basics to tips on how to incorporate this serviceinto your daily leasing activities.


What is Customer Storage Insurance?

When customers store their belongings at your facility, theymay be concerned about what would happen in case of fire,burglary or other catastrophes. A customer storage insurancepolicy commonly offers protection against several different typesof damage to the customer's property, including fire, windstorms,burglary, and water damage due to roof leak and collision. It isusually offered right at the facility, the most natural place toobtain this small and often short-term policy.

Depending on the program, available coverage limits can rangefrom $2,000 to $30,000, with policy terms ranging from one monthto one year. The facility can also choose, in many cases, betweenoffering a program where the customer mails the insuranceapplication and premium payment directly to the insuranceprovider, or one in which the customer pays the insurance premiumto the storage facility along with the rent for the storagespace. When customers pay for the insurance with their rent,coverage starts automatically when they move into their storageunits. The manager forwards the collected premiums to theinsurance company at the end of every month.

Why include this service with everything else you do?

  • Customer service insurance helps you to serve your customers' needs and offer reassurance.

  • Documentation enables you to keep a written record showing that you reminded customers of their responsibility for their stored belongings in a service-oriented way.

  • Catastrophe assistance eases the burden of telling your customers that they have been affected by a catastrophe when you can refer them to an insurance provider.

Offering a program at your facility:

  • Most of the insurance carriers specializing in the self-storage industry offer a variety of customer storage insurance programs. No two programs are exactly alike in coverage and administration, so compare them and see which best suits your needs and your customers' needs. Coverage differences, limits, costs and payment terms can affect your customers' buying decision. The program materials that you will need in order to make this insurance available to your customers are usually supplied to you at no charge. However, some companies may charge shipping fees. Most insurance companies limit the availability of their programs because they must manage costs and catastrophe exposure and comply with the applicable insurance regulations in each state. You may want to find out which laws apply in your area and what qualifications or limitations are imposed by the programs that interest you.

How did Customer Storage Insurance develop?

Customer storage insurance developed out of the needsexperienced by both the storage facility operator and thecustomer. Managers found that customers often confused theself-storage business with the moving and storage business. Amoving and storage company acts as a bailee, and usually takescharge of the property. It may, therefore, be responsible for thesafety of the property. A typical self-storage facility does notusually have any control over the stored property. It leasesspace to tenants just as a commercial building owner does.Managers needed a way to actively show the customer that thefacility was not responsible for stored property.

At the same time, customers needed a way to get insurance fortheir stored belongings easily and inexpensively. Some homeownerspolicies may provide coverage for property in storage facilities,however, many provide limited or no coverage. When insurance isavailable right at the facility's counter, customers can be askedto sign a form: 1) documenting that the facility offered thisextra service; 2) reminding the customer of his or her ownresponsibility for the stored property; and 3) allowing thecustomer to easily obtain insurance coverage.

Many storage managers offer some kind of customer storageinsurance, because it allows them to clearly show the customer ina service-oriented way that the facility is not responsible forstored property. It is also offered because it enables managersto keep a written record that they took this extra step to assisttheir customers. This extra documentation is often contained inthe materials supplied by the insurance provider. Here is anexample of the wording you might see that walks the customerthrough these important concepts:

Tenants Store Property at Their Own Risk

I understand that this self-storage facility and/or its management:

1) is a landlord renting space, is not a warehouseman, and does not take custody of my property;
2) is not responsible for loss or damage to my property;
3) does not provide insurance on my property for me; and
4) requires that I provide my own insurance coverage or personally assume risk of loss or damage.

Tenants Choice of Insurance Options

I have been given a brochure that explains the customer storage insurance available here. As initialed below, I agree to obtain insurance coverage on property in my storage space for its actual cash value or personally assume risk of loss or damage.

________Please initial only one:

________Customer storage insurance policy

________From my own insurance agent

________Personally assume risk of loss or damage

Tenant's Signature_________________________

What kind of storage situations is customer storageinsurance designed for?

Most customer storage insurance programs are designed to coverproperty stored in enclosed locked spaces. Many of these programswere originally created to insure household goods. Look forpolicy limitations on business property if you have many businessclients. Most policies exclude or severely limit coverage forproperty stored in the open because of the increased exposure.Check your insurance program to see how it treats property storedin outside storage spaces, and suggest to your customers whostore boats or cars that they consult with a local auto orwater-craft insurance agent because of these restrictions.

Customer storage insurance programs may also not fit otherless traditional selfstorage situations. A good example is when amajority of a storage facility's business is in active businessrecords storage. Because the goods move in and out of thefacility more frequently, the responsibility for these recordscan shift - you are no longer in the traditional "tenantleasing storage space" situation. These records are oftennot covered by the standard customer storage insurance policybecause of the number of records and the difficulty of placing avalue on them. This situation is often handled by a specialagreement between the management and the customer.

In the last few years, storage facilities have also providedadditional services. These may include the use of a moving truckor pick-up and transportation of the customers' belongings.Customer storage insurance policies usually do not take effectuntil the belongings are in the selected storage space, so thecurrent customer insurance programs may still be offered. Keep inmind that your responsibilities may change when you provideadditional services. It is important to check with your insuranceproviders and your attorney about any special agreements neededwhenever your services differ from traditional self storage.

The newest service in the storage industry is one that (forlack of an official term) we'll call "portableself-storage." The self-storage company delivers specializedcontainers to the customer and then picks them up after thecustomer packs them. This presents a new challenge to customerstorage insurance providers. While there is increased protectionfrom water and crime for these belongings, they also move aboutunder the facility's care, creating a new type of risk for"space-based" customer storage insurance policies. Thistype of service can affect other parts of the business, becauseit pushes it closer to the moving and storage industry withanother world of laws, responsibilities and liabilities. This canaffect a storage facility's ability to offer a separate customerstorage insurance program for portable self-storage situations.Perhaps new customer storage insurance products and services canbe created if the portable self-storage concept grows and managesto remain free of the laws that regulate the moving and storageindustry.

Why offer such a program?

Customer storage insurance programs offer benefits for you andfor your customers. They provide you with the opportunity toexplain that your facility is not responsible for customers'property and to document that explanation. At the same time, youare able to offer the customers a low cost way to protect theirstored belongings. Even if no one chooses to purchase theinsurance, the written documentation becomes an important part ofyour business records if a question arises at a later date.

It is clearly to your customers' benefit to be able topurchase this type of protection for their stored property. Inthe unfortunate event of a catastrophe, such as a fire or ahurricane, the presence of a customer storage insurance programhelps you, as well. Imagine how it would ease the burden oftelling your customers about a major disaster if you could alsoreassure them by referring them to an insurance provider. Yourability to provide caring customer service is enhanced by theseprograms.


Now that you have a program, how and when do you offer itto your customers?

Insurance Phobia - we all have it. Few managers are eager totalk about insurance, unless they have seen first-hand how it canbenefit customers when a catastrophe strikes. Your managers wantto emphasize the benefits of storing property at your facilityand might shy away from suggesting that something bad couldhappen to their stored belongings. But customers will value yourforesight and concern, especially when your facility offers aservice that can help them if an unfortunate event happens. Hereare some tips to help you showcase this service:

1) All insurance providers emphasize service to you and yourcustomer. They provide toll-free numbers and support materials toanswer questions about coverage, administration and claims. Makesure that your new manager becomes familiar with the program youprovide.

2) Let your customer know that your facility took the time tofind a program so that you could offer this additional service tothem.

3) While you manage your facility carefully, situations likehurricanes, earthquakes, and even fires and targeted burglary arebeyond your control.

4) If customers say that their homeowner's policy coversproperty stored elsewhere, that's great. They may want to doublecheck with their insurance agent to make sure that there are nolimitations on coverage.

5) Your customers are spending a great deal of effort to carefor their property by storing it at your facility. Making surethat their property is protected from catastrophes rounds outthis care.


Customer storage insurance programs are changing for a varietyof reasons, thanks mostly to improvements in technology.Facilities are also being built stronger and safer, and thisreduces the insurance risk. For example, improvements in securityhave motivated insurers to offer better crime coverages. Burglarycoverage used to exist only as a partial coverage, usually only50 percent of the total limit chosen. A customer might now beable to purchase full burglary coverage or even theft coverage,where forcible signs of entry are not required to demonstrate acovered loss. Computerization has also helped with paymentoptions and it assists the insurance providers in determiningcoverage and handling catastrophe losses efficiently. And as forportable self-storage, insurance providers always enjoy a newchallenge.

While these improvements are welcome, it will be a long timein many states before insurance can be purchased as quickly aslocks or storage materials. Customer storage insurance is adifferent animal from other ancillary services, primarily becauseit is regulated by each state with its own specific preferences.In fact, many states rely on regulations based on how insurancewas transacted generations ago before fax machines, readilyavailable computers or even telephones and regulators face thedaunting challenge of questioning what is truly necessary andwhat if anything needs to change.

Still, the need for customer storage insurance remains. Thereare no alternatives in the traditional insurance market, and thatis unlikely to change. The future of customer storage insuranceas an enhancement to service for the manager and customer willcontinue to brighten.

Alice Cravens manages a variety of customer serviceprograms for Deans and Homer, an underwriting manager in businesssince 1856. Deans and Homer is one of the founding insuranceproviders for the self-storage industry, and offers comprehensiveinsurance coverage for facilities as well as a variety ofcustomer storage insurance programs. Ms. Cravens may be reachedat (800) 548-1616, or email:

Subscribe to Our Weekly Newsletter
ISS is the most comprehensive source for self-storage news, feature stories, videos and more.

You May Also Like