Successful storage facilities have evolved to provide more than just space; they offer solutions to their customers need for storage under multiple circumstances. Twenty years ago, most facilities simply rented out space and maybe sold locks. Today, facilities sell services and products such as truck rental, packing materials, mailboxes, wine storage, tenant insurance and a variety of other specialized offerings.
Operators who have invested the time to understand the unique needs of their clients most often make insurance coverage available for goods in storage. After all, if its worth storing, its probably worth insuring!
If youre not a believer, consider this: Its 8:30 a.m. and youve just arrived at your facility to find 36 locks have been cut and all contents in the units burglarized. Those customers with insurance will be easily dealt with, but those without insurance will not and will most likely be very unhappy. Which calls would you prefer to make?
Although an insurance broker cannot likely provide any worthwhile advice on what packaging materials or locks will work best, he can provide guidance on how to make available insurance products to suit your customers needs. There are some customized insurance programs for self-storage, but not all insurance brokers have access to them or the expertise to explain or administer them effectively.
Understanding the Issues
Its unfortunate that so many facility operators are unaware of what insurance products are available and, as a result, storage customers may experience an unexpected financial loss (claim). This is the last scenario in which a storage operator wants to find himself. Its for this reason among others that content insurance was developed close to three decades ago.
In many cases, facilities have not offered a solution because they do not fully understand the issue. Many operators believe customers can easily obtain insurance protection through their home-insurance policies. Unfortunately, this is often not the case. The reality is only some companies offer insurance for contents in storage, with coverage ranging from very restrictive to very broad. Another common scenario is storage customers who are between residences and no longer have a home-insurance policy in place.
Customers who have homeowners insurance may find their coverage for goods in storage is limited. Restrictions commonly found on a homeowners policy may:
- Limit duration of coverage for goods in storage to 30 days.
- Reduce and restrict limit for the contents in storage.
- Restrict coverage, such as no coverage for losses arising from theft or water damage.
- Require an increased deductible.
- Offer no coverage available for contents stored off premises.
Unfortunately, facility operators are not alone when it comes to understanding the insurance issue, as many of their customers have not even considered it. Lets face it: Most often people only really pay attention to what is covered when things go wrong. This is usually because they have not read their policies, consulted with their insurance broker, or purchased insurance specific to their goods in storage. An informed storage operator with the help of an experienced broker will ultimately facilitate a good solution for customers.
Making the Offer
Storage operators should consult their lawyer when drafting their rental contract. Be sure to include a section pertaining to insurance and what responsibility is assumed by the facility. Having a lawyer review the rental agreement is critical, as you want to ensure your contract with your tenant is acceptable and legal. Each state has its own legal issues to be considered.
Assuming you have decided to offer a solution to your customers insurance needs, determine how this will be best accomplished. In my experience, its best to allow the customer to choose a limit that suits his individual requirements.
Choose an insurance broker with experience in the self-storage industry, one who has taken the time and investigated compliance issues with state and local laws. Tenant insurance is not just another added value but an opportunity to ensure you and your customers are protected following an unforeseen event or catastrophe.
Tobias (Toby) Struewing is a commercial account executive for Cowan Insurance Brokers Ltd., a provider of insurance and risk management products and services for the Canadian market. For information, call 866.912.6926; e-mail [email protected]; visit www.cowangroup.ca.