There have been a few lawsuits involving tenant insurance and protection plans in the self-storage industry in recent years. You might remember reading about Heckart v. A-1 Self Storage Inc. and Perez v. Public Storage Inc.
In the A-1 case, the plaintiff alleged a tenant-protection plan is a form of insurance. The court found in favor of the self-storage operator, determining the two aren’t same. In the Public Storage case, the plaintiff claimed the facility operator forced customers to purchase its tenant insurance and failed to communicate that renters had insurance options. The court ruled in favor of the defendant, finding the plaintiffs had no evidence of “systemic violations” or “uniform misleading statements” made by self-storage employees.
Though our industry emerged victorious in these cases, they’re a reminder to all facility operators who offer tenant insurance or protection that they need to understand what they’re selling. These two products are completely different. All employees must be thoroughly trained on these offerings, and there must be written internal procedures to guide these transactions. All staff need to know exactly what’s stated in the lease agreement as well as what’s being modified when they sell a tenant-insurance or tenant-protection policy.
Dos and Don’ts
Let’s examine some important best practices when it comes to selling these products to customers:
- Require customers to insure their stored goods.
- Offer a protection plan or tenant insurance to customers at the time of move-in.
- Notify customers they have options other than the product you’re selling.
- Limit your liability by stating a maximum value limit of stored goods per unit as part of your lease.
- Don’t force customers to purchase your product; it must be optional.
- Don’t refer to protection plans as insurance; know the product you’re selling.
- Don’t overcharge customers for the service you provide.
- Don’t discuss insurance coverage with customers if you aren’t an insurance agent.
Remember, while you can require your customers to insure their stored goods, you can’t force them to purchase your product. Homeowner’s or renter’s insurance policies can often cover offsite stored goods, though the limits may be low and deductibles high. These are legitimate issues managers can point out to customers and direct them to discuss with their insurance agent. Typically, a tenant-insurance policy or protection plan will provide better coverage with a lower or even no deductible. This service is for customers’ benefit, so let them know that!
Ensuring employees are well-trained in offering tenant insurance and protection plans is the best way to avoid a related lawsuit. Write procedures and ensure staff follow them. In our litigious society, everything you can do to prevent a legal situation will help sustain your self-storage business.
Chris Betteridge is the protection program director at Deans & Homer, which has supplied insurance to the self-storage industry for more than 40 years. The company offers business policies, direct mail-in tenant insurance and tenant-protection programs. Chris is focused on enrolling facilities and helping clients increase penetration of protection plans. For more information, call 480.210.6111; e-mail email@example.com; visit www.deanshomer.com.