ISS BLOG – Covering the Bases: Pointers for Securing the Best Insurance Coverages for Your Self-Storage Business

Earlier this week I discovered my pool pump wasn’t working properly. So, I did my due diligence by checking the motor, made sure there wasn’t anything causing a blockage and flipped the circuit breaker several times. None of these actions fixed the problem. Recognizing that this isn’t something I can repair, I filed a claim with my home-warranty company.

I own a home built in the 1980s. As you can imagine, things around here break … often. I can’t even count how many times I’ve had the pool pump and AC serviced. There’s also been plumbing problems, a broken refrigerator and other repairs that needed to be made. And while I grumble about paying the service fee (on top of the monthly bill), I understand that without this insurance, I’d be in a world of hurt.

As a self-storage operator, I’m sure you can relate. No doubt you do your best to keep your property in tip-top shape, but components age. They fail and need to be replaced. Then there are the catastrophic, unexpected events that happen—fires, floods, hurricanes and the like. There’s also the possibility of a tenant, employee or guest getting hurt while at your site. Self-storage properties can be targets of crimes and even cyber-attacks. Operating this kind of business comes with risk and you need to do your best to cover yourself before something happens.

Unfortunately, insuring your business has become complex and costly. You might wonder what coverages are necessary. Self-storage also requires unique coverages that aren’t typically included under a general insurance policy. What if your business expands or you add new services and products? How will your policy be affected? All good questions. After reading tons of insurance-related articles over the years, here’s my take.

Find the right coverage. It’s imperative to choose the right coverage. Assess your business risks and determine what could happen. What coverages are necessary, but also think about adding some that are specific to the self-storage industry such as pollution or cyber liability, or one aimed at employee dishonesty. Find an insurance company that works with self-storage owners as they’ll be able to offer guidance on how to craft the best policy to protect your site.

Remember to ask about deductibles and policy limits. While you might be tempted to choose a higher deductible to get a lower premium, consider what that could mean if you had to file a claim. It’s been to overestimate your insurance needs rather than underestimate them.

Know your policy. Seems like a no-brainer, right? If only. Insurance policies are carefully crafted and sometimes contain language that isn’t always easy to decipher. A couple of years ago, the spring on my garage door broke. I called the warranty company to make sure it was covered. The rep said it was, so I scheduled the repair. Turns out, she was wrong and I paid a hefty bill. So, get clear on what’s in the policy. Ask questions about “what if” scenarios. Make sure you fully understand every part of this important contract. Again, this is where your insurance rep can help.

Shop around. Insurance rates are at all-time highs right now and businesses in all industries are paying hefty premiums. Part of it is inflation, of course, but there are other factors driving these surges such as property-replacement costs, extreme weather events and continuing problems with the global supply chain. Just like your storage customers look for the best price for their budget, so should you. This doesn’t mean skimping on coverages, but carefully looking at the various companies and what they offer to determine the best fit for your business. Compare their rates and terms but also consider their company longevity and familiarity with the self-storage industry. You can often get a better premium when you bundle policies through one insurer. Some will even offer a discount if you pay it annually rather than monthly.

When your policy is up for renewal, get three quotes. Often, two will be pretty close, and the third will be on the outer limits, either too low or too high. Nix that one and focus on the other two.

Assess your needs and goals. Your self-storage business is constantly evolving. You might’ve added more units in the past year, renovated your office, had a roof replacement, hired more employees or updated your technology. All of these can affect your premium. When changes happen, talk to your insurance rep to see how your policy might be impacted. And, never let your insurance lapse!

If you’re a subscriber to Inside Self-Storage Magazine, you’ll notice our May issue focuses on risk-related content. Our cover header is “What Might Topple Your Tower?” It’s something every self-storage operator should seriously consider now, rather than later.