Self-storage operators and managers are always looking for ways to improve their offering, draw more customers and increase revenue. As modern-day ancillary services, shipping and delivery conveniences are gaining favor with operators and consumers alike. But could this add-on profit center be putting your business in jeopardy?
How much do you really know about shipping/delivery services and how they relate to tenant and owner responsibility? Take this little quiz and see how you fare.
1. Your tenant asks you to sign for a package delivered to the facility in his name. If something happens to it, will your commercial insurance cover your expenses?
A. Yes, of course. I have the best insurance in the country.
B. Maybe. My insurance agents dont always like to hear from me.
C. No, it is not covered in my policy.
2. Your lease explicitly states that you, as the landlord, take no responsibility for property your tenant keeps in storage. If you put a package into a tenants unit and it becomes lost or damaged, are you liable for it?
A. Not at all, according to my lease.
B. Maybe, but Im not going to admit anything.
C. Probably. My lease says one thing and then I take responsibility for it anyway.
3. A tenant asks you to send a package for him along with your own mail. Are you liable if this package fails to arrive or is damaged?
A. Of course not; the customer prepared it for shipping.
B. Maybe, but I followed his instructions.
C. Yes, very likely.
Dont be surprised if the answer is C in each case.
When you take a package into your hands, you automatically incur what is called in insurance terms the care, custody and control (CCC) of an item. That means youre responsible for it. And if you dont have a separate agreement covering that transaction specifically, you may be out of pocket or in court for losses.
Any time you perform a service outside of the defined responsibilities of a landlord (someone who rents and maintains property), you run the risk of assuming liability for damages. This includes accepting deliveries, sending packages or mail, putting boxes into a tenants unit, or anything similar in nature.
In insurance terms, liability means you have taken the legal responsibility for the condition of property. Commercial insurance will protect you if something listed in the policy goes wrong with your building or on the premises. Your lease should protect you if your tenants property is stolen or harmed and it is not your fault. However, if you take CCC of the tenants property and dont have something in writing to protect you, you may wind up with no protection at all.
Defining the Law
Lien laws in most states are very specific: A self-storage owner/operator is a landlord. He is legally responsible for the upkeep of the facility and its grounds. His priority is to rent storage space on a regular basis. Legally, he should not have access to the rented space or to the property of the tenant. Instead, renters take full responsibility for the condition of their property in their units.
But what happens if you go beyond that definition? Todays self-storage facilities offer a myriad of services, one of which may be package shipping and delivery. Does your staff regularly handle packages to and from eBay on behalf of clients, even those who are not necessarily tenants? If so, be on guard. If you take CCC of a package without an agreement, you may be liable for damages or losses to it. You need a legal contract with these clients detailing the responsibilities of each party. This should be a contract separate from your self-storage agreement.
Another example is a self-storage facility with commercial tenants who use their units as mini-warehouses for product samples or supplies. These tenants may regularly receive shipments for business purposes. Vendors, such as pharmaceutical reps, often have packages coming and going on a regular basis.
If you accept any shipment on behalf of your tenant, what do you do with it? Do you have a unit set aside for this purpose? If so, who has access to it? Do you monitor the comings and goings of that unit? Do you put items from more than one tenant in this space? Have you discussed your procedures with an attorney and insurance agent to make sure you are in the right?
What if you put the delivery into the tenants unit? To do so means you must have keys to the units lock. If you have this sort of access, you may be responsible for everything in the unit, like it or not. This liberty goes beyond the definition of a landlord because you can access the unit at will. If something goes missing or is damaged, who takes the blame? Are you ready to stand in the line of fire?
Heres one last quiz question for you:
How do you protect your business and tenants when operating a self-storage facility?
A. I am a landlord and my lease spells out my responsibilities. My tenants understand this, too.
B. I take CCC of their property only when we both sign a document that outlines each of our responsibilities.
C. I make sure my commercial insurance is up to date and has enough coverage to protect my employees, my business and me.
D. I offer a property-insurance program to my tenants so their property is protected.
E. All of the above.
Hopefully, you selected E. Your lease is the first line of defense against unwanted liability charges, followed by other legal documents such as your insurance policy. Finally, a tenant-insurance program gives renters a way to repair or replace damaged property without holding you liable.
Dont be caught without protection. Consult with an attorney who is familiar with the laws in your state and with the self-storage industry. Have your insurance agent check to ensure you have coverage under your commercial policy. Adding additional coverage, such as a Customers Goods Legal Liability endorsement may give you just the protection you need. Dont let special deliveries catch you off guard and put your business in jeopardy.
Paul Cardamon is the national sales manager for Bader Co., a national insurance firm offering affordable and convenient point-of-lease tenant insurance and commercial insurance for the self-storage industry. For more information, call 888.223.3726; e-mail [email protected]; visit www.baderco.net.