All business owners should have appropriate insurance to provide coverage for the unexpected. However, not all businesses are alike. Self-storage operations have unique insurance needs and face different risks than discount stores, restaurants and many other ventures.
A business owner policy (BOP) is a package of commonly needed insurance. It’s convenient and typically easy to customize compared to larger plans. A basic BOP consists of three primary coverages:
- Property: This provides protection for property owned, leased or rented by a business, including buildings, equipment, inventory, furniture and fixtures, as well as loss of accounts-receivable and valuable papers and records. Most BOPs also cover business-owned items and those owned by a third party but kept temporarily in the care, custody or control of the business or its owner.
- General liability (GL): This covers a company’s legal responsibility for the harm it may cause to others (bodily injury or property damage) because of negligence. This includes costs related to litigation and court judgments if a customer or other third party files suit against a business or its employees.
- Business interruption: This helps replace lost net income that normally would have been earned when an event causes a temporary shutdown. It can be a critical factor in the ability to recover from a catastrophe and continue operation.
Most business owners understand the importance of having the right GL insurance but may not understand that a GL policy isn’t all-inclusive and doesn't provide protection for losses associated with business personal property and other critical coverages. A BOP is an affordable option for businesses that need liability and property insurance. Compared with standalone coverages or larger commercial-package policies, it offers advantages for smaller operations:
- Convenience: By bundling property and liability coverages, the insurance process is simplified, resulting in a single policy and premium. It can also streamline the process of filing and resolving a claim.
- Affordability: In many cases, purchasing various standalone lines of insurance or going with a larger commercial package policy is less affordable than a BOP.
- Customization: Just like businesses, BOPs come in all shapes and sizes. They can be customized for particular industries including self-storage. The coverages included can be modified to meet your specific insurance needs. This flexibility means a BOP can grow and change with your business.
As a self-storage operator, it’s important for you to work with your insurance agent to identify a BOP that will address relevant exposures while offering flexibility and customization. It’s also important to identify a policy that offers specialty coverages designed specifically for the storage industry, such as customer goods legal liability and sale-and-disposal liability.
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.