People are buying more and more with less space to store at home. It is no surprise then that the storage and warehouse leasing industry in the U.S just keeps growing. With that, self storage insurance is vital.
Over the past 5 years, it has grown nearly 4% and reached a revenue of an astounding $37 billion.
What is it people are storing? For the majority, it is the mundane collections of life but for some, it is things that are much more interesting. The FT reported on one man who collected valuable second world war relics.
The storage facility business model is attractive and seems simple enough. Don’t be fooled. There are unique challenges to this industry not present in other businesses. There are always risks when it involves other peoples property.
You will need to make sure you mitigate those risks by having the right self storage insurance. Read on to learn more.
Of course, all insurance premiums are negotiable to some degree. However, this type of insurance is your starting point. It is fundamental to a quality insurance policy.
You could refer to this type of insurance as your General Liability Insurance.
This should include coverage for the commercial property itself in the event of a fire, faulty electrical wiring or a disaster with the plumbing. It will also protect you and your business from any lawsuits based on injuries and accidents from slips, trips and, falls.
This coverage will also provide you with a legal defense. This is extremely important. It is amazing what types of claims can come forward such as being assaulted by the facility manager or even being bitten by a dog on the property.
Specific Considerations for Self Storage Insurance
These are payments to cover medical costs for accidents that may occur at the facility. There is no necessity to establish blame or liability. If this is included within the policy, it is the decision of the insurance company whether they will make this payment or not.
What are the benefits? They can save time and avoid entanglement in a claim. Plus, these kinds of payments restore trust and help with reputation.
You may think that you are not liable for the customers’ goods. That is generally true. You are responsible for the space that they use to store their belongings but the items themselves are their own responsibility.
However, by providing a storage space you are accepting that the storage space is suitable to store ordinary items. In other words, those items will be safe within that storage. That means you are responsible for 2 things:
- Protection from the elements
If it could be shown that security had been neglected and items were lost or stolen then it is possible you could be liable for those losses. Alternatively, if your facility fails to protect someone’s belongings from the elements such as leaking water, and damage occurs, then once again you will be held liable for that. This type of insurance will cover you for these risks.
Disposal of Goods
It is a rare landlord that never has a bad tenant. In the case of a storage facility, the time may come when a tenant is no longer paying their rent. They may even consider that the value of whatever they are storing is simply not worth the rent or the effort of moving the items.
You need to be prepared for this. Once they are legally evicted you will need to reclaim the space and remove whatever they are storing.
You will have to prove that you have followed the letter of the law in removing those goods. If for any reason there is a mistake or negligence, this insurance will cover you.
Save the Planet Insurance
This insurance will not actually save the planet but it could save you from an enormous headache if one of your tenants has stored a pollutant or harmful substance in your facility and it leaks.
It is true that your tenant will have to answer for some of the responsibility.
However, you will be expected to demonstrate that you had an agreement in place that covered all eventualities. This can be difficult since you may not know what people are storing.
In fact, the nature of a storage facility invites discretion and a measure of secrecy. Don’t get caught out. Pollution Liability coverage will help defray some of the risks.
Self Storage Insurance and Long Tail Liability
What is long tail liability?
This means that the time of the claim may be much later than the actual event. An example is when someone receives medical treatment but only after a long period of time does the patient want to sue the doctor for unsuccessful treatment or unknown side effects.
Because of the nature of storage facilities, it may be that someone does not actually check their stored items for a long time. They may wish to bring a claim against your business indicating there was damage to their property from a long time ago.
This emphasizes the importance of good record keeping and always keeping your policy numbers.
You should not delay in getting self storage insurance. Getting the right insurance for your business will give you peace of mind. In turn, this will help you to concentrate on your business as you should be.
You are in the storage business but this is one thing you do not want to shelve.
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