There are many things about the self-storage industry that make it a great business. One positive aspect is facility expenses are well-fixed and there are typically few surprises when it comes to operating costs. Another is operators have ample opportunities to increase profit and asset value through ancillary income streams.
One proven way to generate additional revenue and provide customers with a great value-add is to offer tenant insurance. Let’s look at the benefits and what it takes to implement a successful, profitable program. It’s easier than most people think.
Understand the Benefits
Tenant insurance is a smart way to gain recurring monthly income while giving tenants coverage for their stored property. If you’re only selling boxes, locks and other moving supplies during the rental process, you’re missing a revenue opportunity. When properly executed, tenant insurance can bring in thousands of dollars per year.
Without insurance, your customers are vulnerable. Their homeowners’ or renters’ policies may not cover stored belongings or may only cover a fraction of the items’ value. Despite taking precautions and instilling security measures, no storage operator can fully guarantee the protection of a tenant’s items from tornado, hurricane, fire, flood or burglary. A lease agreement releases the operator from liability for these types of losses, but tenant insurance will protect customers from the unexpected.
Tenant insurance is a legitimate, state-regulated product that offers full protection for stored belongings. It’s a win-win for the customer and facility owner.
There are many tenant-insurance programs from which to choose and a variety of providers, which gives you the flexibility to pick one that’s best suited for your business. Most vendors offer competitive pricing along with attractive revenue-share opportunities.
One important note: Unfortunately, some programs on the market are not compliant with state law and insurance regulations, so they won’t effectively protect your tenants in their time of need. Do your research and select a trusted, fully compliant program.
Revise Your Lease
After implementing your program, it’s wise to include an insurance provision in your lease that explains the facility does not insure the tenant's property, and customers are required to provide proof of insurance on all stored goods as a condition of tenancy. Make sure your provider offers the appropriate lease language to coincide with the tenant-insurance program you’re offering, as it may vary from vendor to vendor.
Consider offering tenant-insurance limits that correspond with the limitation-of-value provision in your rental agreement. You might also include verbiage that says the occupant agrees the space isn’t appropriate for the storage of jewels, furs, heirlooms, art works, collectibles or other irreplaceable items that have special sentimental or emotional value to the occupant, and he agrees not to store said items. Once the lease is signed, give a copy to your tenant along with a copy of the insurance policy and brochure, which should outline all coverage and exclusions.
Finally, self-storage owners who offer tenant-insurance programs are required to display a limited-lines license in their office. Make sure it’s current and neatly displayed. If you need an updated copy, contact your provider.
For your tenant-insurance program to be a success, you must have staff buy-in. The facility manager has to educate tenants, especially at the time of move-in. It’s important to discuss the insurance and its benefit with the customer. This can be done more effectively with the proper training.
Make sure all employees are properly trained on your tenant-insurance program and the benefits it offers. Most providers will offer training materials to help with the process. For some vendors, annual training may be required. Keep your team up-to-date.
Market Your Product
You also need to draw attention to your program through good marketing practices. Have plenty of informational brochures and promotional materials in stock and on display. Many insurance providers will offer posters, counter maps, window clings and stickers for use.
With the proper training and materials, marketing your program is as easy as asking for a driver’s license at the time of lease! Completing the lease addendum with the tenant should take less than two minutes. It’s a short time commitment that delivers big benefits for the customer and facility owner.
Get (and Give) Peace of Mind
Your tenants trust you with their treasured belongings. With the right tenant-insurance program in place, you can maintain a positive relationship with them, even in the event of an unexpected loss.
Your tenant-insurance provider is the quarterback for the claims process if a loss occurs. It’s licensed and familiar with the statutes that are applicable in your state. Its staff is trained to gather all documentation, evaluate the evidence and determine any claim payout. The claim-resolution process is handled by licensed adjusters through a regulated process that provides consumer rights to the insureds. It’s peace of mind for all parties involved.
Mario J. Macaluso is senior vice president for SBOA Tenant Insurance, whose program is created by and for self-storage owners. The company’s insurance products are compliant with state laws and administered by Cornerstone Insurance Producers. For more information, call 602.761.9365; e-mail [email protected]; visit www.sboati.com.