Self-Storage Tenant Insurance From the Operator Perspective: Basics, Benefits and More

Understanding tenant insurance can lead to a greater storage experience for your customers and can help insulate your business from liability.

February 4, 2010

4 Min Read
Self-Storage Tenant Insurance From the Operator Perspective: Basics, Benefits and More

Much energy and effort is put into self-storage facilities to ensure customers have a great storage experience. From enhanced security and packing materials to online payment options and 24-hour self-serve kiosks, self-storage has come a long way over the years.

In addition to these feature-rich amenities, many self-storage operators also offer customers the option to purchase tenant insurance. Understanding this important component leads to a greater storage experience for your customers and can help insulate your business from liability.
What Is Tenant Insurance?

Tenant insurance is insurance renters can buy if they don’t already have coverage or don’t want to use their personal renter’s or homeowner’s insurance. A tenant-insurance program offers them a quick and convenient solution to satisfy the insurance requirements of their lease. The offering is affordable, short-term coverage designed specifically to protect property while it’s in a rented self-storage space.

In addition, a tenant-insurance program complements a self-storage operator’s risk-management program. Dealing with a customer with a covered loss who has purchased tenant insurance is a better situation for everyone involved. Another compelling reason to have a tenant-insurance program is most providers offer an administration fee to the operator, which means more facility revenue.

For managers, a tenant-insurance program offers a great way to help customers attain peace of mind for their stored goods. If property stored in a unit is damaged or stolen, a tenant policy can alleviate some of the sting. Plus, managers are not required to be a licensed insurance agent to offer the product. Effectively explaining the insurance requirement of your lease to tenants and presenting them with an insurance addendum is key to helping them choose what’s best for their situation.
Why Your Tenants Need Insurance
The perils covered by tenant insurance include many events that can occur at a self-storage site including crime, fire and natural disasters. The policy provides coverage similar to what’s found in a typical homeowner’s policy.

The convenience of offering a tenant-insurance program at your facility is also good customer service. Many customers don’t have coverage for their stored property, and even if they do, there’s the potential for increased premiums and high deductibles to consider if a claim is made against their homeowner’s or renter’s insurance policy.
Offering Tenant Insurance

There are several ways self-storage operators can offer tenant insurance. It can be purchased through a mail-in brochure, or managers can direct customers to a provider’s website. However, the most effective method is to offer customers a pay-with-rent program.

Most of the major providers of self-storage management software have a built-in insurance module that works with the various tenant-insurance programs. The software makes presenting tenant insurance easy and automatic. The payment is built into the rental program, making it seamless and convenient for you and your tenants.

The best time to discuss tenant insurance is while completing the lease during the move-in process. Each tenant-insurance vendor provides a tenant-responsibility addendum which, when properly employed with every move-in, helps customers understand their responsibility to provide insurance for their stored property―particularly that your facility’s insurance doesn’t extend coverage to customers’ stored goods.

The completed addendum on file will remind customers they were offered coverage at move-in. This can help protect your company in the event a claim is filed. Established case law better protects storage facilities that offer tenant insurance from damage claims arising from destroyed or stolen tenant property.
Covering Your Bases

Having a tenant-insurance program at your facility offers customers convenient, affordable, short-term coverage for personal property stored in a rented space. Your customers will appreciate you looking after their best interests. In addition, high customer participation complements your company’s risk-management program.

Keep in mind that self-storage personnel are not required to be a licensed insurance agent to offer tenant insurance because it’s incidental to your primary duties of renting self-storage. However, there are some states that require the storage group have a limited license.

With just average customer participation, a tenant-insurance program can equal real dollars added to the net operating income of your facility and, of course, an increase in the facility’s capitalization value.
David Rose is executive vice president and director of operations for Storage Property Protection, which offers tenant insurance programs. He has 20 years of experience in the self-storage industry managing, training and marketing. For more information, call 877.575.7774; e-mail [email protected]

To learn more about self-storage tenant insurance, take advantage of the comprehensive education program at the Inside Self-Storage World Expo. Click here for details.  

Related Articles:

Filing a Successful Insurance Claim: Guidance for Self-Storage Operators

Self-Storage Workers’ Compensation Insurance

The Benefits of Self-Storage Tenant Insurance

Self-Storage Talk: Must-Have Insurance

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