By Kay Schaefer
Boat and RV storage has enjoyed increasing popularity in recent years. One reason is many homeowners associations and cities have restrictions on what property owners can park in their carport, yard, driveway or street. In some areas, there’s very limited parking for recreational vehicles.
To accommodate these parking needs, some self-storage operators offer outdoor spaces for tenants to store automobiles, boats, motorcycles and RVs. Some even choose to specialize in this type of storage and are very successful in catering to this niche.
However, there are unique exposures to consider when purchasing insurance to protect this kind of business. Let’s explore the insurance coverages you need and related concerns to address.
Type of Storage
The type of storage you offer will affect your level of risk. Open-lot storage or open-sided buildings present additional liability exposure due to the lower level of protection and security these spaces provide compared to fully enclosed units. These are some items to consider:
- Are the spaces visible from the front office or checked on a regular basis?
- Is the storage area fenced with an access keypad, or is there some other means to monitor people entering and leaving the area?
- Are there surveillance cameras covering the storage area?
- What is the security for large and expensive vehicles?
- Is ownership of the vehicle verified and documented as part of the rental process?
Services and Amenities
Some boat/RV-storage operators offer add-on services to their customers that create additional liability. For example, if you offer to move vehicles for customers, you take on temporary custody and operational control of those vehicles, which exposes you to an increased risk of liability for loss of or damage to customers’ property. Most self-storage insurance policies exclude damage to tenant property. An additional type of insurance, known as garage-keeper’s liability, can provide coverage for this risk.
A boat/RV-storage operator might also offer a waste dumpsite for customer use, which adds exposure to pollution liability. The waste entering the dump station is often hazardous. A standard self-storage insurance policy may provide no or very limited coverage for this exposure. Fortunately, you can purchase a separate pollution-liability policy to protect your business. There’s another reason to consider a pollution-liability policy: Even if you don’t provide a dump station, boats and RVs can drip many hazardous fluids onto the ground. A typical self-storage insurance policy provides limited pollution coverage that may require a covered peril, such as a fire or vandalism, to occur before coverage is triggered. If hazardous materials are simply leaking onto your property, there may be no or insufficient coverage in your standard policy to cover the cost of clean-up.
The value of a stored boat or RV is often much higher than that of personal property typically stored in a self-storage unit. In fact, it can easily exceed $100,000. Your lease or lease addendum should address this potential increased value. It’s even more important that these customers have their own insurance on their stored vehicles.
The higher value should also be considered when you purchase coverage for customers’ goods legal liability and sale and disposal liability. Could an event cause damage or destruction to more than one stored vehicle? Of course! A fire or tornado could create a catastrophic event. It’s not only the facility operator’s responsibility to choose a sufficient limit for customers’ goods legal liability but to consider the value of stored vehicles and the worst-case scenario. This will ensure the purchase of adequate limits.
Boat/RV-storage operators should also have a good understanding of their state lien laws and procedures, especially when a tenant defaults on rent. Eviction substantially increases your liability exposure. Make sure you purchase adequate limits for your sale and disposal liability coverage.
There are unique exposures to consider when you provide storage space for boats and RVs. Your best consultant is your insurance agent. He can advise you on coverage and limits to secure your operation, considering your insurance policy and the services you provide.
Kay Schaefer is the senior underwriter for Deans & Homer, an insurance managing underwriter that has provided specialized coverage for the self-storage industry since 1974. Ms. Schaefer has more than 30 years of experience writing unique insurance coverage. For more information, call 800.847.9999; visit www.deanshomer.com.