Customer Storage Insurance

A valuable service for tenants, peace of mind for you

By Alice Cravens

Customerstorage insurance, tenant insurance, stored-property insurance. All of these names sum upone of the most valuable services a facility manager can offer customers. Like manymanagers across the country, you may already have these insurance brochures sitting onyour counter. You may even glance at them from time to time and wonder how to incorporatethem more effectively and easily into your leasing presentation.

This article will take a look at customer storage insurance from two different angles:First, it will briefly review the basics. Getting back to the roots of what you are doingis always important regardless of your years of experience. And second, it will take alook at how to make the program you choose more effective at your facility--withoutspending more time or finding yourself trying to fill the shoes of an insurance agent.

Part I: The Basics

What is customer storage insurance?

Customer storage insurance is insurance that your customers can buy for the belongingsthat they store at your facility. It is offered right at your facility--the most naturalplace to obtain this small and often short-term policy. There are usually about a dozendifferent situations (perils) commonly covered by a customer-storage-insurance policy:Fire, windstorm, burglary, collision and certain kinds of water damage (such as roof leak)are some of these perils. Depending on the program, limits of coverage can range from$2,000 to more than $30,000, with policy terms ranging from a month to a year.

In many areas, a manager can choose between two different program formats: a mail-inbrochure program, where a customer mails an application to the insurance provider withpayment; or a pay-with-rent program, where the customer signs up and pays for insurancecoverage with the monthly payment for their storage space. The manager then forwards thecollected premiums to the insurance company at the end of every month.

Why offer customer storage insurance?

For any of the following reasons:

Customer storage insurance developed out of the needs of both storage managers andcustomers. It is easy for customers to assume that their property stored at a facility isprotected from loss in the same way that a moving-and-storage company would provideprotection. A moving-and-storage company acts as a bailee, and usually holds property inits care, custody and control. Customers may have certain legal rights because of this. Atypical self-storage facility simply leases space to tenants just like a commercialbuilding owner. Even though the lease spells out responsibilities, customers may still beconfused. The availability of customer storage insurance can help to clarify this.

So, customers needed a way to get insurance for their stored belongings easily andinexpensively. Not all homeowners policies provide coverage for property stored elsewhere,and many customers do not have homeowners insurance to begin with because they are rentingor in transition. With insurance available right at the facility's counter, customers canfill out a form in the rental office that 1) shows that the facility offers this extraservice; 2) reminds the customer of his or her own responsibilities; and 3) allows thecustomer to get coverage easily.

One of the best features of a customer-storage-insurance program, however, is not justthat it clarifies responsibilities, but that it creates useful documentation when acustomer accepts or declines coverage. This documenting capability is often contained inthe materials supplied by the insurance provider. Here is an example of wording you mightsee on these documents that allows customers to actively acknowledge theirresponsibilities.

TENANTS STORE PROPERTY AT THEIR OWN RISK

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

TENANTS CHOICE OF INSURANCE OPTIONS

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

Please initial only one:

What Kind Of Stored Property Is This Insurance Designed For?

Most customer-storage-insurance programs are location-based, meaning that the insuredproperty does not move from its specific location while it is insured. There is moreflexibility in today's programs in terms of payment plans, limits and crime coverages(such as choosing between 50 percent and 100 percent theft or burglary coverage). Mostcustomer-storage-insurance policies still value property at an actual cash-value basis asopposed to replacement-cost coverage. Some policies might also have limitations onbusiness property or items that might need more specialized coverage such as antiques,fine art and jewelry.

Customer storage insurance is usually not designed for:

Getting a Program at Your Facility

Most of the insurance carriers specializing in self-storage offer a variety ofcustomer-storage-insurance programs. As no two programs are exactly alike in coverage andadministration, compare them and see which best suits your and your customers' needs.Coverage differences, limits provided, costs and payment terms can affect your customer'sbuying decision. Most insurance providers limit the availability of their programs becausethey must manage their own costs and catastrophe exposure--and have insurance regulationsin each state that govern the program. You may want to find out what qualifications mayapply to your location for the programs you are interested in.

PART 2: Presenting Customer Storage Insurance

Unfortunately,insurance is often a subject that people would prefer to avoid--and managers sometimesfear that it might cause potential customers to conjure up thoughts of disaster at thefacility. But the truth of the matter is that those facilities that have seen disasterusually become the biggest insurance advocates afterwards. They have seen first-hand thatbeing insured makes handling a catastrophe much more bearable for everyone. Startpreparing your facility now by addressing the insurance issues in a straightforward waywith your customer. And, if you find yourself rushing through the subject of insurance toavoid having your customer think that there are problems at your facility, try using thesesuggestions to improve your comfort level:

1. Prepare yourself. Because customer storage insurance is for yourcustomer and not you, it is easy to keep it at a distance. If you haven't recently donethis, try reading the brochure that describes your program from start to finish--not justonce, but a few times. Being familiar with what you are offering will lessen theuneasiness you may have without adding to your responsibilities.

Keep in mind that knowledge is power, and while you might be tempted to answer yourcustomers' insurance questions yourself, you are not licensed as an insurance agent.Therefore, you should refer customers to the brochure and the insurance provider. Manyinsurance providers also supply manager's guides as additional support for you, as well astoll-free numbers for you and your customer. Don't let the fear of the unknown be abarrier to you or your customer. If you are unsure of what is on your counter, yourcustomer will be, too.

2. Prepare your customer. Mention insurance along with the extraservices that you provide early in your discussions with customers. This can be done whenyou are first walking the property with the customer or even over the phone. Customers areoften uncertain about the need for insurance and mentioning it early can be helpful.

3. You can't fight Mother Nature. The biggest fear that many managershave involving customer storage insurance is being faced with questions from customerssuch as, "Why do I need insurance?" and "Is this insurance availablebecause you have a problem here?" No one enjoys hearing questions like these afterselling the attributes of a facility. Offering customer storage insurance does not meanthat problems have infiltrated your facility. Ironically, because a facility has to beapproved by an insurance provider before materials will be supplied, it is often the otherway around.

One of the best reasons to make insurance available is this: Even though you may havethe latest security features and strong construction, Mother Nature is stronger than themost protected storage facility. If you find yourself faced with these kinds of questions,remind your customers that situations can happen beyond anyone's control (and refer themto the insurance provider, too). Windstorms, earthquakes and fires cause more extensivedamage than burglaries. Some managers even display pictures of what hurricanes have doneto their local area over the years as a way to bring home this reality.

Wouldn't you rather be fully prepared if you were spending time, energy and moneystoring at a facility? As with all customer service, putting yourself in your customer'sshoes will help you develop your most comfortable approach to working successfully withyour customer-storage-insurance program.

As a marketing manager for Deans & Homer, Alice Cravens has worked withcustomer storage insurance and a variety of other service-oriented insurance programs formore than a dozen years. Deans & Homer is one of the founding insurance providers forthe self-storage industry, and offers comprehensive insurance coverage for facilities aswell as a variety of customer storage insurance programs. Ms. Cravens may be reached viae-mail at [email protected].