Self-Storage Calamity Clean-Up: Steps to Take After an Accident, Crime or Natural Disaster

A self-storage business can be a lucrative investment, but it also comes with risks that can lead to costly repairs, insurance claims and damage to business reputation. A catastrophe can occur at any time. It might be a break-in, vandalism or some other crime. It could be a tenant who stores hazardous materials that lead to a fire or other environmental hazard. Natural disasters are becoming more prevalent, causing fierce winds and floods. Maybe someone trips and falls on your site, becoming seriously injured.

If one of these calamities occurs, it’s important that you and your self-storage team know how to respond, both immediately and in the weeks that follow. This is critical not only to protect your property and the people on it but to ensure positive public relations. If you must file an insurance claim, you want that process to go quickly and smoothly as well.

Following is a list of steps to take if tragedy strikes at your self-storage facility. We’ll also cover some prevention strategies you can use to avoid incidents happening in the first place.

Responding to a Self-Storage Catastrophe

If your self-storage business experiences a loss, it's important to respond swiftly and appropriately. Here are the key steps to take following an accident, crime, natural disaster or other incident:

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Put safety first. Make sure all staff and tenants are protected. If anyone is injured, call emergency services immediately. Evacuate the premises if warranted by your facility’s crisis protocols.

Notify authorities. If the loss involves a fire, flood or hazardous materials, contact emergency services, even if the situation appears under control. For crime-related incidents, call the police to file a report. Retain any documentation provided by law enforcement or the fire department, as it’ll be essential for handling your insurance claim.

Assess the damage. Once it’s safe to do so, evaluate the damage to your self-storage buildings and tenants’ stored belongings. Cross-reference your customer list with the affected units to identify those whose goods might be compromised.

Document everything. Before moving or cleaning anything, take detailed photographs and videos. Visual evidence will be critical for your insurance claim. Save any security footage that might be useful. Also, create a list of anything that was damaged, including business and customer property. Be as specific as possible to avoid discrepancies during the insurance-claim process.

Mitigate further damage. If the property is still at risk, take immediate steps to secure and protect it. Document any repairs that are made for your insurance company.

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Notify your insurance provider. Report the loss as soon as possible. Most insurance companies have a specific timeframe in which they expect to be notified of a loss. Share all the evidence you’ve gathered and clearly communicate the extent of the destruction. Your agent will guide you through the next steps. Stay calm and speak regularly with the adjuster to help the claim progress smoothly.

Notify affected tenants. Promptly inform customers whose units have been impacted. Explain the situation and the steps you're taking to resolve the situation. If they have coverage for stored items, advise them to contact their insurer to file a claim. Be prepared for upset tenants. Communicating and showing empathy will help reduce the risk of disputes or legal actions.

Coordinate repairs. You may need to hire specialists to restore your self-storage facility. Only choose licensed, insured contractors, and keep records of all repairs and costs.

Manage legal obligations. If there’s a chance of disputes with tenants or contractors, or if you’re unsure about your liability, consult with a lawyer who specializes in insurance or property law.

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Further Mitigation to Explore

Once all of the above critical steps have been followed and the situation has been largely resolved, you’ll want to sit down with your self-storage team and identify what went wrong and what preventive measures could’ve helped. Look carefully at your policies and procedures and determine whether they should be updated to include additional protocols.

Another smart thing to do at this juncture is to review your current self-storage insurance policies and determine whether you should add more coverages. Self-storage owners often focus on obvious risks like theft, fire and vandalism; however, there are several less obvious hazards that won’t be covered under standard policies unless specifically addressed. Consider the following common occurrences and the insurance solutions that can help protect your business:

Cybercrime. Your digital systems and websites can be vulnerable to cyberattacks. Hackers can steal sensitive customer information, which can lead to claims for identity theft or financial loss. Cyber insurance covers costs associated with a data breach, including legal fees, notification of affected customers, credit-monitoring services, and potential fines or penalties. It can also pay costs associated with business interruption caused by a cyber event.

Environmental contamination. A self-storage facility could be held liable if customers store hazardous materials that seep into the ground or cause other issues. Pollution insurance covers the cost of cleanup, legal fees and damages related to environmental contamination that might not be covered under a general-liability policy.

Natural disasters. Losses from floods or earthquakes are typically excluded in a standard business-insurance policy. Coverage can be purchased separately depending on your self-storage location.

Wrongful sale or disposal of customer goods. If you settle an unpaid account by emptying the tenant’s storage unit, the renter may claim their property was wrongly disposed of or sold without adequate notice, even if you follow the law. Sale-and-disposal coverage provides legal-defense costs and protects your business from claims related to auctioning or disposing of stored property, especially in cases of procedural mistakes.

Often, Prevention Is Best

If any of the above sounds daunting, bear in mind that prevention is often the best medicine. Properly maintaining your self-storage facility can help curtail accidents, prevent crime and avoid serious damage during a natural disaster. Consider the following best practices.

Set emergency protocols. When something devastating happens, it’s easy for people to panic and react emotionally. Creating emergency protocols for your self-storage business in advance can help alleviate anxiety and mistakes in the moment. Have clear, well-documented plans in place for a wide range of incidents including theft, injury, fire, flood, power outage, etc. Then train your staff in these situations, so they can respond appropriately.

Maintain your buildings and components. Inspect your self-storage property regularly for leaks, mold, pests or structural issues. Install smoke detectors, fire alarms and sprinkler systems, and test them regularly. If you offer climate-controlled units, make sure the HVAC systems are well-maintained to keep the temperature and humidity at proper levels. Use clearly marked signs to guide tenants around the property and restrict access where needed. Finally, install slip-resistant flooring in high-traffic areas, particularly in wet or icy conditions.

Enhance security. Use a self-storage gate system with a keypad that requires specific tenant codes, so you can control and log who enters and exits the site and when. This reduces unauthorized access and provides a clear record for potential disputes. Proper lighting and surveillance cameras may prevent accidents and crime, so make sure your entrance gates, hallways and parking lots are well-covered. Cameras can also provide evidence if an incident does occur.

Educate your tenants. First and foremost, use a self-storage rental agreement that clearly outlines your customer’s responsibilities and the limits of your liability as the facility operator. Tenants need to clearly understand the legal nature of their rental. In addition, enforce policies that prohibit the storage of dangerous materials such as explosives, chemicals, and flammable or perishable goods. These restrictions should be outlined in your contract, but you can also post facility signage to ensure customers understand.

Finally, consider requiring your tenants to carry insurance for their stored items, whether they get it through their homeowners policy or purchase it from your business. This should help smooth the situation in the event a customer suffers loss or damage to their stored goods.

Unfortunately, emergencies and natural disasters can and do happen at self-storage properties. However, being prepared for them can lessen the impact on your business, staff and tenants. The above measures enable you to significantly reduce the likelihood that an incident will occur or that it’ll lead to an insurance claim. This proactive approach also fosters a safer, cleaner, more secure environment for tenants and staff.

The Right Response Leads to Resolution

When a catastrophic incident occurs at a self-storage facility, an immediate and intelligent response is crucial to minimize further loss. Your No. 1 goal is to protect your staff and tenants, and minimize damage. Next, you want to do anything you can to facilitate the insurance-claim process. You must also manage customer and public relations. There’s a lot to think about and do quickly, but with the right plans in place, you can ensure a smooth resolution.

Terry Campbell is a commercial insurance agent and Jessica Yarbough is vice president of operations at Johnson Insurance Services, a provider of insurance coverages to the self-storage industry. Terry has been in the storage business for nearly 30 years. He launched the self-storage lending division at Live Oak Bank in 2015, then joined Copper Storage Management, where he’s still a part owner and advisor. Jessica joined Johnson in 2014 and holds an ownership stake in the company. To reach the authors, call 800.255.777 or send them an email at [email protected] or [email protected].