If you are new to the industry and have just purchased your first property or are looking to purchase your first property, you may not know the answer to this question. Maybe you have heard about it and are wondering how self storage insurance differs from typical insurance like homeowners or vehicle. Or, you could be a seasoned owner who has run the same store for over twenty years and never really thought about storage insurance.
What Is Self Storage Insurance?
Self storage insurance is designed specifically for the self storage industry. It covers the contents of a self storage unit, protecting the tenant’s belongings while in storage on your property. Almost all personal and business property they keep in storage is eligible for coverage under these policies, up to a certain pre-determined value based on the level of coverage selected.
Self storage insurance will cover a multitude of things that can cause damage, such as fire and smoke, roof leaks, water damage, burglary, rodents, natural disasters and even in transit coverage within a 100-mile radius of the storage property. These policies typically have much smaller deductibles than homeowner policies, and the premiums don’t increase if a claim is filed. Not only that, but if the recommended disc lock (an industry standard) is used, the deductible is waived if burglary occurs.
There are several third-party providers from which you can choose. You can check with your state self storage association or the national Self Storage Association (SSA) for recommendations on insurance providers.
Why Should I Require Self Storage Insurance?
You can avoid a lot of headaches when or if the unexpected happens if you require self storage insurance. Because your property manager is not an insurance agent, they can simply refer your tenants to the agent (through the third-party policy they selected or their own agent through their personal policy) to deal with any claims.
At all of the stores managed by Investment Real Estate Management (IREM), we have a contractual requirement that every tenant must have insurance on their storage unit contents as part of our rental agreement – whether it’s the third-party insurance that we offer in store or their own personal policy. Not only is this a good benefit for the tenant to protect their belongings, but it can be a great revenue generator for you as the owner.
Let’s review an example to show you how you can generate revenue by requiring insurance coverage. These figures are purely for representation purposes:
• Let’s just say you get $1.00 commission per month on every third-party policy you sell.
• And, you have 1000 storage units at your property.
• Of those 1000 storage units, 80% of your tenants opted for your third-party coverage, which means that 800 storage units are collecting commission each month.
• That translates into $800 every month of insurance commission.
• Which means an additional $9,600 per year in revenue!
Why would you not want to offer third-party insurance at your store after seeing that number?
When you elect to offer third-party insurance coverage to your tenants, the insurance provider will supply the property manager with pamphlets, information on coverage and contact information for the insurance agent(s). This information is given to tenants who elect one of the third-party policies in case they ever need to file a claim. It is important to note that your property manager is not an insurance agent, and must refer tenants to the insurance agent(s) for policy coverage questions and to receive more detailed information. Fortunately, most tenants will never have to file a claim. But, it’s great customer service for you to show you care and have offered them coverage options just in case something happens.
If you have any questions about self storage insurance and why you should be offering it, or you are interested in professional management of your self storage facility, contact us to have your questions answered. As the saying goes, if it is worth storing it is worth insuring!