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Louisiana Department of Insurance Issues Cease-and-Desist Orders Against Self-Storage Tenant-Protection Plans

The Louisiana Department of Insurance (LDI) has issued cease-and-desist orders to stop self-storage operators from offering tenant-protection plans to customers. The LDI contends the plans are insurance products that should be sold under a license, according the national Self Storage Association (SSA), which shared the information in an Oct. 1 newsletter to members.

“The orders are inconsistent with court decisions in California and Kentucky that ruled in favor of tenant-protection plans and held that they are not insurance,” SSA officials said. “It is expected that the orders will be appealed. The orders do not affect facilities licensed by the [LDI] to sell tenant insurance.”

The Supreme Court of California ruled unanimously in April that self-storage tenant-protection plans don’t constitute insurance. In the court’s opinion, a self-storage operator that offers tenant protection “assumes risks that arise directly from the rental relationship, and it does not provide indemnification beyond damages that might occur to property while it is stored in the rented space. Therefore, the protection plan has no purpose independent of the rental agreement, and is purely incidental to the rental agreement.”

The Kentucky Court of Appeals ruled similarly on a 2014 case, reversing a superior-court judgment that customer-protection plans are insurance.

No timeline was mentioned on when appeals against the LDI cease-and-desist orders might be filed.

The Monday Morning Globe 10/1/18, Cease-and-Desist Order Issued Against Louisiana Protection Plans

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