Workers’ Compensation Insurance: Why Self-Storage Operators Need It, How to Choose a Policy and How to Minimize Claims

Operating a self-storage facility involves a range of risks and responsibilities, not just for the owner but for their employees, too. Workers’ compensation (comp) insurance is an essential component to safeguarding the business.

In most states, it’s also a legal requirement. Failure to comply can lead to fines, lawsuits or even business closure. That alone is a compelling reason to purchase a policy, but it also protects your self-storage facility against financial liability and loss. Either way, it’s critical to understand your state’s specific regulations.

Stemming from the employer’s legal and ethical duty to protect staff, workers’ comp insurance offers a compromise: Employees give up the right to sue for negligence in exchange for guaranteed benefits if they suffer a work-related illness or injury. The policy covers medical expenses, lost wages, rehabilitation costs and, in severe cases, death benefits. It also ensures that the business is protected from lawsuits, as team members generally can’t sue their employers if they’re receiving workers’ comp benefits.

Let’s explore more specific reasons why workers’ comp is important to your self-storage operation as well as considerations for choosing a policy and best practices for minimizing claims.

Why You Need Workers’ Comp in Self-Storage

Self-storage facilities may seem like relatively low-risk environments, but there are threats to employees’ physical well-being, for example:

Machinery and equipment. Self-storage employees often move heavy items or operate machinery to maintain the premises. Performing these duties can lead to sprains, strains or more serious injuries. Repetitive tasks can lead to hidden musculoskeletal issues that may result in costly claims over time. Equipment malfunction or improper use of machinery can lead to serious harm.

Site safety hazards. Uneven surfaces, poor lighting or extreme weather conditions can increase the risk of slips, trips and falls. In regions with frequent ice, snow or rain, the risks are even greater. Self-storage employees may also interact with harmful substances during site maintenance such as cleaning chemicals or pest-control products, potentially causing respiratory or skin damage.

Customer interactions. On occasion, a self-storage employee’s interaction with a customer can lead to assault or an accident. For example, the customer may become confrontational or violent. The team member may attempt to help a tenant lift a heavy item or navigate the facility and an accident could occur.

Choosing a Workers’ Comp Policy

When selecting a workers’ comp policy for your self-storage operation, consider the following factors:

Local requirements. Each state requires different businesses to have workers’ comp coverage and may set different minimum-coverage levels or penalties for non-compliance. Some states also offer variations in coverage based on the number of employees or the nature of the work, so it’s important to choose a policy tailored to your specific needs. Make sure that your policy meets or exceeds your legal obligations.

Scope of coverage. Choose a policy that covers all risks related to your self-storage facility. Also, make sure it includes all full- and part-time staff as well as temporary or seasonal workers who may face higher risks due to shorter tenures and less training.

Policy limits. This is the maximum your insurer will pay for a claim. It should be enough to cover medical costs, lost wages and legal fees. High expenses from severe injuries can quickly deplete a low-policy limit, exposing your business to additional financial risk.

Premiums. Workers’ comp insurance costs are usually based on payroll, number of employees and work-risk level. While price is a factor, don’t skimp to save money. Poor coverage can lead to significant out-of-pocket expenses. Some insurers offer discounts for strong safety programs, which can help lower premiums over time.

Experience modification rate (EMR). Your EMR is used by insurance companies to determine your workers’ comp premium. This figure reflects your company’s safety record compared to other businesses in the self-storage industry. A lower EMR can result in lower premiums, so investing in team training and maintaining a safe work environment is beneficial.

Minimizing Workers’ Comp Claims

While having workers’ comp insurance is crucial in self-storage, minimizing the number of claims is equally important. Here are some best practices for reducing workplace injuries at your facility:

Protecting Your Business

Workers’ comp insurance isn’t just a legal requirement for self-storage facilities, it’s a critical component of protecting your business and employees from the financial and legal consequences of workplace illness or injury. By understanding the risks, selecting the right coverage, and implementing safety measures, you can minimize claims and maintain a safe environment for your team.

Investing in comprehensive coverage is an investment in the long-term success and stability of your business. A proactive approach can save significant costs and ensure that your self-storage facility operates smoothly, even in the face of unexpected challenges.

Holly Fechtmeyer is an underwriter with Universal Insurance Programs, a Phoenix-based firm that provides specialized insurance to niche markets. She has more than five years of experience in self-storage facility insurance. To reach her, email [email protected].