The following is part of an exciting 2013 content series entitled "What Would You Do?" ISS asked managers and owners how they would react in difficult situations that can arise at any facility. We then asked experts to advise on their recommended course of action. To see all articles and slideshows in the series, enter code WWYD13 in the search box at insideselfstorage.com. The complete sequence will roll out over several weeks and be available in full by March 10, 2013.
Self-storage operators never know when a crisis may hit. Whether it's to deal with a fire, a flood or an injury on the property, every facility should have procedures in place to guide employees through the process of responding to an issue with confidence and without increasing the companys risk.
Good risk management starts by carrying the necessary insurance coverages to protect the self-storage facility and its owners from liability. Although you hope youll never have to file a claim, having adequate coverage and minimizing exposure to risks helps to preserve the health of your business. Understanding how to act once an incident occurs can save you and your tenants from additional hardship and expense. Do you know what to do in the face of a crisis? Is what you would do the same as what you should do?
Inside Self-Storage recently reached out to self-storage operators to learn how they would proceed during specific but common situations that could occur at any facility. They were asked, What would you do if ...
- A customer refused to buy tenant insurance?
- Your facility experienced a fire, roof leak or flood?
- A tenant injured himself on your property?
Answers were provided by members of Self-Storage Talk, the industrys largest online community. We then asked industry insurance experts to tell us what operators should do in each scenario. Our insurance experts are Kay Schaefer, senior underwriter for Deans & Homer in Phoenix; and Don Sedlacek, vice president of claims for MiniCo Insurance Agency LLC in Phoenix.
What would you do if a customer refused to buy tenant insurance?
To date, many operators are not mandating their customers purchase tenant insurance. This is true for Richard and Beverly Haessler (RichardandBeverly), resident managers of Park Inn Storage in Odessa, Texas, and Ralph Driscoll (FHARumRunner), manager at West End Self Storage in Richmond, Va., although both said they encourage them to do so on their own. There is a spot on the TSSA [Texas Self Storage Association] lease where they have to sign, stating it is their responsibility to insure their belongings, and the facility cannot be held responsible for any loss of any kind, say the Haesslers.
What SHOULD you do?
Schaefer: Tenant insurance should be available and affordable to all self-storage customers for many reasons. While some people focus on tenant-insurance sales as a source of auxiliary revenue, it also serves as a collateral source of legal protection for you and supports the insurance and non-liability provisions of most rental agreements. Finally, it provides an important service to those customers who are storing valuable property and are in need of insurance protection.
It should also be the tenants decision about how they want to handle their own risk exposure. If they choose not to purchase insurance, an operator may still reinforce the insurance and non-liability provisions of their rental agreement by offering the tenant access to insurance and by the tenants written acknowledgement that they accept the risk without insurance.
Finally, I would note that some customers will have tenant or homeowners insurance that they believe will cover loss or damage to their stored property. This is becoming less true over the past few years, as many insurance companies have begun adopting a new standard version of the homeowners insurance contract that specifically addresses and limits coverage for property in a self-storage facility to $1,000. Such a limit is often far below the dollar limitation that may be included in a typical self-storage agreement for property in storage.
Sedlacek: If someone declines to purchase tenant insurance, make sure the customer understands the full range of benefits included in the policy. No matter how well-trained your staff may be, some customers are still going to decline the insurance. To prepare for this eventuality, you may want to institute a policy requiring all tenants to provide evidence of insurance. If a customer does not purchase the tenant insurance you offer, he will need to give the facility a copy of the declaration page of his homeowner policy demonstrating coverage for items stored in a rented storage facility. The evidence of insurance should be filed with the lease agreement for reference in the event the tenant suffers a loss.
If you notice a large number of your customers decline insurance coverage, it may be time to review the program youre offering to make sure it provides value for your tenants. Does the program offer zero-dollar deductibles? Replacement-cost coverage? A wide range of available coverage limits and premiums? Features like these are available in the marketplace. Participation is the key to success when it comes to tenant insurance. Evaluate your program annually to ensure youre offering a program with high value for your customers and benefits for your business.
What would you do if your facility experienced a fire, roof leak or flood?
Driscoll says he has experienced several roof leaks and a flood. His first action was to limit the damage by stopping the source of the leak, followed by notifying the tenants, insurance and his supervisor. If unable to contact the tenant, I entered the units and determined the extent of damage and took whatever action necessary to prevent further damage, he says. Tenants who reported damage were offered dry units and assistance with moving their things. Boxes, tape, dry rags, etc., were provided at no cost, and free rent [was provided] for one or two months. As a result, we were never sued and lost very few tenants.
Randy Lucore (RandyL) of CR Area Storage in Cedar Rapids, Iowa, has experienced all three scenarios. In the case of the fire, his first action was to reach the facility to assess the damage before alerting tenants. We contacted the tenants whose units were in the same building [as the fire] but had not been damaged yet so they could get there before smoke/fire/water got to their unit, Lucore recalls. Then we contacted the people with units who had damage. Unfortunately for them, they did not need new units, but we relocated people elsewhere in the building. We rented a dumpster for the tenants with damage. When it was cleared out, we rebuilt the building.
During his experience with flooding, Lucore says his facility and local residents had about four days to prepare. We contacted all tenants more than once in those days leading up to the flood, he says. We had employees onsite to assist in rearranging units to get items off the floor or to put less expensive stuff lower than more valuable items. Or, if people had a place for items, we helped them move out. On the day the river crested, most roads from our facility were already closed. We stayed as long as local authorities would let us.
Employees and tenants were not allowed back into the facility for a week. Driscoll says the facilitys first course of action was leaving the doors open on all empty units to dry out. In some cases of occupied units, a notch was removed from the tracks to allow the doors to be locked with about a foot of open space at the bottom. Once the facility was prepped, tenants were allowed to inspect their units. The facility helped haul unwanted items away.
To preserve saved or undamaged property, the facility used dry, vacant units as temporary storage spaces. We tried to arrange as many empty units in a building at once for cleaning, Lucore says. We left a buffer of one empty unit around the cleaning area to occupied area. Then we worked on getting tenants who had stuff to store into new clean units. This whole process took six weeks, start to finish.
What SHOULD you do?
Schaefer: Secure the area to restrict public traffic into the area. Allow for emergency-response units to investigate the incidents. Take photos, contact the tenants and keep notes of your efforts. The fire or water damage may have created serious hazards that could harm your employees and customers, and these need to be attended to before allowing access to the area. Take any reasonable steps to prevent further property damage. Emergency repairs to abate a problem, such as a roof leak or permanent smoke damage, are often covered by insurance as they reduce a continued or increasing loss created by the initial cause.
If there has been any known or suspected damage to your customers property, contact or make reasonable efforts to contact the tenants of each affected unit, keeping a record of your efforts. Once this is accomplished, contact my insurance agent. Your insurance company needs to review the loss and damage to determine whether a covered loss has occurred that will indemnify you and provide defense coverage under their policy if necessary.
Finally, as much of the country has become painfully aware in the last few years, particularly inclement years, flood damage is typically excluded from all standard insurance policies. Flood coverage may be purchased separately from a specialty insurance market or the National Flood Insurance Program. If your facility is in an area that has or may experience flooding, this should be an important consideration.
Sedlacek: Fires, roof leaks and floods are dramatic events that have the potential to cause catastrophic damage to a self-storage facility. The initial action is going to depend on the individual scenario. In the case of a fire, call the fire department immediately. For roof leaks caused by severe weather, wait for the storm to clear first for your safety. With a flood, undoubtedly you will have to wait for the water to recede.
While these actions all differ, the core purpose is the same. You must wait until the area is safe before you should consider entering the premises. While you are waiting, call your insurance agent to begin the claim process. Your agent will most likely want to send an adjuster to view the scene as quickly as possible. In the case of a fire, an adjuster may be able to arrive at the scene while state fire investigators are still conducting their investigation to determine what may have caused the fire.
When the facility or affected area is safe to enter, it will be time to begin the process of documenting the damage. Take photographs to help your agent process your claim effectively. You will also need to take steps to prevent any further damage to the property or injuries to staff and customers. Once you have secured the area, you may begin contacting the affected tenants. Tenants should not be permitted access to any fire-damaged, leak-damaged or flood-damaged areas until the premises is deemed safe and you have completed your documentation activities for the facilitys insurance claim.
What would you do if a tenant injured himself on your property?
Driscoll and SST senior member geraldine1051 have both had tenants injure themselves at their facilities. In geraldine1051s case, she found a tenant on the ground who was unresponsive. She called 911 to dispatch emergency personnel to the facility. The tenant had been drinking and sustained severe head injuries from falling. When the tenant eventually returned to the facility, she asked him to vacate his belongings.
Driscoll says the incidents he has experienced are similar in that the injuries all resulted from tenant carelessness. Depending on the severity of the injury, he says managers may need to call 911, administer first aid or immobilize the victim. He recommends managers become certified in first aid and CPR. After the injured tenant is stabilized, Driscoll would notify the insurance agent of the incident and call his employer.
Only one person ever filed a claim, and my employer settled it by paying medical bills, he says. [Another injured tenant] was grateful I saved his leg by removing an extremely heavy pallet off of it and stopped the bleeding until the rescue squad arrived.
What SHOULD you do?
Schaefer: First, be sure the injured tenant has proper medical attention as needed. All information about the incident (including the date, time, location, people involved and description of the accident and injury) should be recorded as soon after the event as possible. Photographs of the scene and any physical elements that may have contributed to the accident or injury can be very helpful. Next, call your insurance agent so the insurance company can be notified promptly to review the injury and circumstances.
While you might want to express genuine concern and offer help to the injured tenant, you should not admit responsibility for the accident or injury until that has been objectively and independently determined by your insurance company.
Sedlacek: There are many ways a tenant may become injured on your property. Sometimes the injury is reported immediately, or you may even witness the event. Theres always a possibility, however, that a tenant will become injured and wait days, weeks or longer to notify the facility.
If you witness an injury or its reported to you right away, your first response should be to offer medical assistance. If the person involved is unconscious or obviously severely injured, call an ambulance immediately. If the person is responsive, you should offer to call an ambulance. The injured person may decline, but you need to make the offer.
You should also collect personal information regarding the injured person and any witnesses, including full name, address and telephone numbers. For non-tenants, be sure to record the persons status (tenant guest, prospective tenant, etc.). Photograph the area, complete a written incident report, and ask the injured person and witnesses to sign and date it. The next critical step is to call your insurance agent to report the incident.
In the case of a tenant who reports an injury that happened in the past, the steps are similar. Complete an incident report and photograph any visible injuries if possible. Be sure to collect full contact information from the injured party and any witnesses, and document any medical attention the person received (hospitals, doctors names, etc.). Youll need to know the date and time of the injury so you can determine which staff members were on duty during the incident.
It's important to be sympathetic to a person who claims an injury, but do not admit any liability, agree to any responsibility, or make any promises to pay for damages. If the tenant solicits this type of admission, refer him to your insurance agent. Finally, do not delay in notifying your insurance agent. Your agent needs to be made aware immediately of any incident that may result in legal action against your business.
To read more great content in the ISS "What Would You Do?" business-challenges series, type code WWYD13 in the search box at insideselfstorage.com.