Reprinted with permission from List Self Storage.
As many self-storage facilities are now aging, upgrades have become a key topic among industry operators and vendors. The primary purpose of renovation is to enhance rental revenue and property value. Another important consideration, however, is how modernizations can improve your property from a risk-management perspective and potentially lower your insurance costs.
Innovative technology and more durable construction materials are changing the self-storage landscape, not only for new facilities being built but for older ones that are incorporating them as refurbishments. From an insurance underwriter’s view, building and security upgrades to older structures and premises are considered a positive action and will be reflected in the premium analysis. If your insurance agent provides documentation of your enhancements to the underwriter, it may help you secure premium credits.
Keep in mind, upgrades aren’t the only consideration when it comes to rating risk. The primary elements are geographic location, building value, construction type and the facility’s three-to-five-year loss ratio. Operational policies, such as requiring tenants to provide evidence of insurance and including a value limitation in the lease agreement, are also considered by underwriters.
When it’s time to make improvements to your facility, do your due diligence. Select reputable vendors that are licensed and insured and come with impeccable references from previous clients. Also, schedule a policy review with your insurance agent to discuss any planned upgrades and identify exposures that may need to be addressed through changes to your coverage, limits or deductibles.
Investing in enhancements to site amenities, safety and security not only add to the value of your property and attract tenants, they can lower risk and make your insurance premium more attractive.
Mike Schofield is CEO and president of Phoenix-based MiniCo Insurance Agency LLC, a provider of specialty insurance programs for self-storage businesses in Canada and the United States. For more information, call 800.528.1056; visit www.minico.com.