March 1, 1998

5 Min Read
Inside Self-Storage Magazine

By William Mattern

The self-storage industry has undergone many changes over thepast 20 years, growing from a small family of forward-thinkingpeople to a large, powerful group of savvy businessprofessionals. The growth and maturity the industry has enjoyedhas also created some new issues we are learning to deal with intime.

When the self-storage industry was young, so were thebuildings. We had new, secure roofs that did not leak, new doorsthat properly sealed the units, and we enjoyed an absence ofcrime in our facilities. This environment was very attractive toinsurance companies, and several developed products specificallyfor the self-storage industry. These companies provided muchbetter coverage than what was available at the time, at asignificant reduction in premiums.

According to the Self Storage Association's First AnnualStatistical Report, the average self-storage owner pays 1.3percent of gross income for property insurance. Compared to anaverage of 40 percent paid by other types of businesses, you cansee that insurance for the self-storage industry is veryreasonable.

During the late '80s, while the self-storage industry wasmaturing, so were its buildings. Due to various issues we wereexperiencing at the time--primarily the recession--maintenancewas deferred in many facilities. Additionally, the criminalelement found self-storage units an ideal place to conductactivities. These developments caused the losses in our industryto skyrocket, and our insurance costs to rise.

One of the areas with a drastic increase in claim activity iscustomers' goods. Customers' goods legal liability is a veryimportant coverage specific to our industry. The basic premise ofthe self-storage industry is that we act as a landlord, not awarehouseman; we never take possession of our customers' goods.Therefore, we are not responsible for those goods since we aresimply renting space. However, there are certain situations thatcan create legal liability on your part for damage to yourcustomers' goods.

For instance, by providing a building to store goods, werepresent protection against the elements. If a customer's goodsare damaged by water or some other form of the elements, he mayfeel that you were somehow negligent in honoring thatrepresentation.

If you are found liable for damage to customers' goods, yourcustomers' goods legal liability coverage will pay the claim.More importantly, it provides defense costs even if a claim isfound to be groundless, false or fraudulent. It also includescoverage for damage done to customers' goods stored in the open,should you be found legally liable for that damage.

Customers' goods legal liability coverage is not normallyavailable in the standard insurance market and cannot normally beadded to the standard business-owner's package policy. It iscoverage that is available through specialty markets forself-storage insurance.

With the recession well behind us, many facility ownersfinally have their deferred maintenance schedules under control.Their new emphasis on routine maintenance is helping containlosses in the area of our customers' goods. Aside from completelyre-roofing your facility, there are many new products availablefor sealing aging roofs. There are also companies that sellmaintenance products, such as unit-door threshold seals, thatprovide cost-effective alternatives to more expensive repairs.Facility operators have kept themselves busy implementing newideas, such as providing pallets in each storage locker. Thepallets keep their customers' belongings a few inches off thefloor, helping keep them dry in the event of surface wateraccumulation.

Security is also a major concern, and a tremendous number ofvendors have gone into the business of providing various types ofsecurity equipment. A growing number of facilities today areequipped with door alarms, computer-controlled entry gates andhigh-tech surveillance equipment. These products, accompanied bya good resident manager, help control crime.

Although it's sad to say, the days are long gone when we canrent a unit to new customers and turn our back on theiractivities in our facilities. Many operators today photographcustomers and obtain their fingerprints. This may seem a littledrastic, but it has become a commonplace practice in somegeographic areas. Some operators argue that this type ofintrusion will chase off customers, but if it is done in a mannerthat managers express their concerns for the customers' property,very few honest people will mind the extra care taken forsecurity. The customer that it does chase off might be acriminal, and lost revenue on a criminal is really money in thebank.

Another good crime-prevention procedure falls under theheading of follow-up marketing. For example, mailing the newcustomer a thank-you card the day he rents the unit is goodmarketing and can help you discover a problem sooner than if nocontact was made until the customer became delinquent. You canalso include referral cards with the thank-you note forcustomer's friends and neighbors. When a prospective tenantpresents the referral card, the referring customer gets a gift ora discount. This creates good customer relations and helps reducethe likelihood of crime in your facility.

New construction and proper maintenance of buildings, combinedwith hands-on management, attention to security and theprevention of crime, add up to safe and secure places forcustomers to store their goods. Combine these efforts with goodcustomer relations and we can all help keep insurance costs forour industry at a very affordable level.

Remember, no matter how large or small your self-storagefacility may be, securing adequate coverage is essential forprotecting your business and your peace of mind.

William Mattern is program manager for Universal InsuranceFacilities Ltd. Universal's Self-Storage Insurance Program isunderwritten by the Ranger Insurance Company. Founded in 1923,and licensed in all 50 states, Ranger is rated "A-" byA.M. Best and Company. Universal offers a complete package ofcoverages specifically designed to meet the needs of theself-storage industry.

For more information on Universal's coverages, or to get aquick, no-obligation quote, contact Universal InsuranceFacilities Ltd., P.O. Box 5400, Scottsdale, Ariz. 85261-9957;phone (800) 844-2101; fax (602) 970-6240; Web

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