Limiting Your Liability Exposure, Part II

By David Wilhite

Sale and disposal legal liability coverage is unique to theself-storage industry. As you may recall from Part I of thisarticle, sale and disposal legal liability provides self-storageoperators with protection against conversion: the act ofwrongfully taking, selling, using or destroying the goods ofanother party. Such claims are made against negligent actsarising from the disposition or disposal of customers' propertywhen reclaiming space for which rental charges are delinquent orunpaid.

Due to the incredible diversity of goods commonly stored andthe wide range of values of the property, the penalty forconversion can be extremely high. Not long ago a self-storageoperator was held liable for $250,000 in damages by a Californiacourt for the wrongful sale of a customer's property. The courtjudged that the storage owner's notice of intention of sale wasdefective, since the operator's newspaper ad did not include thedelinquent tenant's name, which was required by state law. Thecourt ruled that the operator was in violation of negligence andconversion as a result of this error.

Nearly every state has specific statutes that govern the saleand disposal process, as provided for in the Self-StorageFacility Act. However, if the procedures are not preciselyfollowed, the self-storage operator leaves himself vulnerable tolawsuits claiming loss or damage of stored goods.

Facilities in states where the statute has not been enactedshould include a clearly-worded statement in their rentalagreements that the owner serves as a landlord renting space totenants suitable for storage; that neither the owner nor thefacility exerts any care, control or custody over a tenant'sproperty; and that responsibility for stored property remainsvested with the tenant and not the landlord.

Most self-storage insurance providers offer sale and disposallegal liability coverage, which includes loss or damage to yourcustomer's personal property, and protects you against claimsarising from the sale, removal, disposal or disposition ofcustomers' property when reclaiming space for which rental orother charges are delinquent or unpaid. The coverage furtherprovides for defense and legal costs, even if a customer's suitis groundless or fraudulent. Best of all, the cost is quitereasonable for the peace of mind and protection you receive.

David Wilhite is marketing director of Universal InsuranceFacilities Ltd. For more information, contact Universal at Box5400, Scottsdale, AZ 85261-9957, call (800) 844-2101 or fax (602)970-6270.