A Self-Storage Operator’s Guide to Tenant-Protection Programs

No matter what a self-storage operator does to protect their customers’ belongings from harm, there’s always risk. Learn how a tenant-protection program can give you and your renters peace of mind while providing the business with a meaningful revenue stream.

Nate Kinet, Chief Revenue Officer

October 29, 2022

5 Min Read

When using self-storage, tenants trust that their belongings are going to be safe at the property. Most facility operators take this responsibility very seriously, implementing the necessary precautions to prevent damage and theft. Despite this level of care, things can go wrong. Roofs can leak, and criminals and rodents can find their way into units.

Because unfortunate incidents can never be fully erased, it can be advantageous to offer your self-storage customers a tenant-protection program. These plans are designed to provide an extra layer of protection and peace of mind for you and the renter. They can also create a meaningful revenue stream for your business.

Quick Overview

Protection programs safeguard tenants’ belongings against loss that results from lighting, fire, smoke and other covered causes. If theft or damage occurs, the renter is reimbursed for the value of their items, up to their coverage limit.

Be aware: A tenant-protection program is not the same as tenant insurance. While there are similarities between the two products, they differ in essential ways:

  • Tenant protection isn’t insurance and, in most states, it isn’t bound by state license requirements. Tenant insurance requires the storage operator to be licensed and maintain that eligibility, with ongoing costs and continuing education.

  • Tenant protection enables you to set your own program terms, conditions and pricing structures based on facility size, location and relevant economic factors. With insurance, the provider is in control.

How Tenant Protection Works

Most self-storage lease agreements state that the operator isn’t responsible for tenants’ stored goods. With tenant protection, they actually agree to assume limited liability for customers’ property. This is specified via a lease addendum.

The program can then be structured to shift this liability away from the facility operator, typically to an insurance carrier selected by the tenant-protection provider. This transfer occurs through an insurance policy—often a CLIP (contractual liability insurance policy)—and the carrier insures the risk.

Once the protection plan is implemented and customers are enrolled, tenants can rest easy knowing their belongings are covered for just a few dollars of additional rent per month. Should they need to file a claim, they’ll contact the tenant-protection provider directly, freeing up the operators’ time to focus on other responsibilities.

Operator Benefits

It’s rare for an owner to find an opportunity that increases business revenue without incurring capital expenditures. When working with the right tenant-protection partner, self-storage operators benefit from a high-margin product without a hefty price tag. In fact, you shouldn’t have to invest a dime in the program. Here are other product features:

High revenue share. On most plans, it’s at least 60%. To demonstrate the profit potential, let’s say you receive a 75% revenue share on all plans sold. You have 1,000 occupied units and require that all customers carry tenant protection or provide proof of private insurance. Assuming 85% of your tenants sign up for the plan at $12 per month for $2,000 worth of coverage, you can expect to collect $10,200 in revenue per month.

Required coverage. The self-storage real estate investment trusts achieve success by offering high-margin protection programs that garner impressive adoption rates. Their secret to strong participation is to make coverage a requirement. This protects everyone involved and ensures that when a loss occurs, the tenant has a path to recovery.

Alternative coverages. Mold, mildew, rodents and vermin are some of the most commonly excluded coverage types. Work with a provider that offers protection against these types of damage. When applicable, extend coverage to include larger items such as cars, boats and RVs. This is especially relevant if you offer outdoor vehicle storage and the tenant’s existing insurance has a high deductible.

Claims-resolution efficiency. While liability is transferred to the protection partner, self-storage operators need to know the provider will do its part to ensure tenants are taken care of in the event of a loss. Programs with a transparent claims-resolution process and in-house claims adjusters can make a world of difference to you and your customers.

Transparency into program performance. Access to accurate revenue, unit-occupancy and program-enrollment data can be difficult to find. The best tenant-protection programs are those you can easily measure.

Value to Tenants

Your customers have a lot of stress in their lives. As a self-storage operator, you have the opportunity to alleviate some of their anxiety by offering a way for them to protect themselves against catastrophe. For most tenants, a minimal monthly fee is a small price to pay to avoid significant financial loss.

Many self-storage customers don’t realize that their existing homeowners’ and renters’ policies likely have lower coverage levels or even exclude coverage for items stored off premises. Making them aware of their options and offering tenant protection is a way to demonstrate care for them and their property.

Let your customers know that the self-storage lease agreement doesn’t hold you liable for the loss of their stored belongings. Convey that your operation has chosen to ensure all tenants are covered from damage or theft by making insurance a requirement. To fulfill this obligation, they may choose to sign up for your protection plan or opt out by providing proof of private insurance. In doing so, you give them the power to source other forms of insurance while ensuring everyone renting at your facility is protected.

Deciding on a Program

When you’re ready to choose a tenant-protection program, find a partner that understands the self-storage industry. Your provider should be backed by an A-rated carrier and have a proven claims-resolution process. The best suppliers act as a partner and provide you with ample training for facility managers, software-specific setup guidance, and program materials you can share with tenants.

Tenant-protection programs are an efficient way to increase revenue at your self-storage property, which in turn helps you improve facility value. At the same time, it provides peace of mind to you and your tenants that their belongings will be protected.

Nate Kinet is chief revenue officer at SafeLease, a tenant-protection provider that partners with self-storage operators nationwide. The company leverages technology and a partner-centric business model to create new revenue channels that maximize the value of commercial property assets. Kinet has overseen new partnerships, with more than 600 facilities resulting in more than 175,000 units enrolled in the SafeLease program. For more information, email [email protected].

About the Author(s)

Nate Kinet

Chief Revenue Officer, SafeLease

Nate Kinet is chief revenue officer at SafeLease, a tenant-protection and insurance provider that partners with self-storage operators nationwide. The company leverages technology and a partner-centric business model to create new revenue channels that maximize the value of commercial property assets. Kinet has overseen new partnerships, with more than 1,800 facilities. For more information, email [email protected].

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