By Keith McConnell
From the perspective of insurance and risk management, boat/RV-storage businesses are similar to traditional self-storage operations, but with key differences. When it comes to insuring a boat/RV-storage facility, it’s important to augment general liability with coverages that address the exposures involved. Adequate insurance is vital to address potential liability resulting from damage to buildings, canopies, equipment and stored vehicles.
This article summarizes some of the insurance coverages that should be considered by boat/RV-storage operators and offers general advice on risk management.
Business-income (or business-interruption) insurance is a critical coverage that addresses the loss of income your business may experience as a result of property damage that forces the operation to slow or cease. In the event of large-scale damage, this coverage may help keep your business viable even when it’s been negatively impacted.
Building-ordinance coverage is another important one for all structures on the property. It offers protection if buildings are damaged to the extent (commonly 50 percent or more) that they no longer meet local building codes or ordinances and require demolition and rebuilding.
Customer goods legal liability and sale and disposal liability are two specialty coverages that should be added to your policy. The first provides coverage against loss or damage to customers’ personal property for which you may become legally liable. The second provides coverage for negligent acts arising from lien sales and the disposal of customers’ property when you reclaim rented space as a result of tenant delinquency.
Both of these coverages tend to be optional or may be included at relatively low limits. Given the value of the vehicles that may be stored, wise storage-facility owners will select higher limits. For example, limits of up to $1 million wouldn’t be unreasonable for many boat/RV-storage operations.
If your facility offers valet or other services that require staff to enter or operate a customer’s vehicle, talk to your insurance agent about garage-keeper’s legal liability. This coverage is generally for service departments and body shops, but some amenities offered at boat/RV-storage facilities may require you to add it to your policy.
Risk-management efforts for boat/RV-storage facilities are similar to those of a traditional self-storage, but with additional considerations for the nature of the items being stored. Here are a few:
Security. Security is a high priority, so be sure to install access gates, fencing, lighting and surveillance cameras. A resident manager is an excellent provision to ensure there are eyes on the property at all times.
While security equipment is a great investment, it’s of little value if it isn’t operational. Your staff should conduct frequent property inspections to identify maintenance issues such as gate malfunctions, faulty cameras and burned-out light bulbs. Any necessary repairs should be made as quickly as possible.
Clarity. If you offer open-lot storage, take the time to pave, line and number the vehicle spaces. This will allow those responsible for conducting property inspections to quickly spot vehicles that are missing or suspicious ones that shouldn’t be parked on the lot. It also aids in quickly identifying the owner of a vehicle that may have been damaged or stolen. Finally, accurate identification is critical in the event of a lien sale. Auctioning the wrong vehicle would be a very costly error!
Contracts. Maintain a separate lease agreement or addendum for customers who store vehicles on your property. This document should help you collect information including:
- The vehicle-identification number
- A copy of the current registration
- Details about the lienholder
- A thorough description of the vehicle, including photos
It’s also smart to require customers to provide evidence of vehicle insurance. Having this information on hand is crucial in the event of property damage or a tenant default. Lien sales involving vehicles can include a multitude of state-specific requirements and regulations. Contact the appropriate authorities for details and follow the law to the letter.
There are many issues involved in successfully operating a boat/RV-storage facility. Make good use of resources such as your attorney and independent insurance agent. They can assist in identifying exposures and help you select the best mix of insurance coverages and limits to protect your business from potentially costly claims and lawsuits.
Keith McConnell is vice president of business development for Phoenix-based MiniCo Insurance Agency LLC, which provides specialty insurance programs for self-storage businesses in Canada and the United States. For more information, call 800.528.1056; visit www.minico.com.