Just like any other large investment, you want to be sure your self storage facility is properly protected. So you build high walls, install gated access, employ smart security features, and so on. But you’re not done yet. Protecting your investment also means having insurance that will cover you in the event of damage, theft, injury, and more.
10 Types of Self Storage Insurance for Owners
Here’s a look at commonly available self storage insurance coverage plans for owners that you may want to consider. You should always speak with self storage insurance providers to gain a better understanding of each type of coverage and to see if they offer any additional storage insurance for facility owners.
1. Buildings and Business-Personal Property Insurance
These forms of self storage insurance form the foundation of a quality policy that safeguards your business. They provide blanket coverage for your buildings, as well as coverage for any property-related claims that could come up, such as suspicious fires, faulty electrical wiring, or fence damage.
Pro-Tip: Try to find a policy that includes replacement cost rather than actual cash value; replacement cost doesn’t factor in depreciation when valuing a claim, so you receive more compensation for damages.
2. Commercial-Business Liability Insurance
Accidents happen, and at a self storage facility, slips and falls are among the most common. Commercial-business liability insurance covers bodily injury for these types of accidents and others (for example, an injury caused by a defective gate or roll-up door). This same insurance can also offer protection from property damage that arises due to normal facility operation.
Some slip and fall accidents have resulted in million-dollar settlements. Be sure you’re protected with the proper insurance in order to avoid large claims often associated with these types of accidents.
3. Business-Income Insurance
Depending on self storage insurance provider, this may be listed as business interruption, extra-expense coverage, or loss of rent. This type of self storage insurance was created to reduce any further risk to the business following a loss. For example, let’s say there’s a fire at your facility and you’re forced to temporarily shut down for repair, resulting in loss of income or profit. This insurance will help pay for ongoing costs you’ll need to pay during this time, up until the business is once again fully operational.
4. Customer Goods Liability Insurance
Storage facilities aren’t responsible for customer belongings, they merely provide rental space in which to store the goods. However, there are a few situations that can create some liability. Customer goods liability insurance is designed to protect you from claims that arise from loss or damage of the stored goods of tenants.
So what could happen to a tenant’s belongings that put some liability on the facility? Generally, the facility must be found to have been knowingly negligent. For example, knowing there was faulty wiring but doing nothing about it, which results in a fire that damages tenant property.
5. Sale and Disposal Liability Insurance
If a self storage tenant is evicted for non-payment, facility owners have the right to auction the stored property through their state’s lien laws. Despite this, claims from upset tenants can still be brought forth. In these instances, sales and disposal liability insurance protect owners against the act of wrongfully taking, selling, using, or destroying tenants’ goods, as well as the legal costs associated with a lawsuit.
6. Pollution Liability Insurance
Pollution liability insurance is beneficial for facilities that store cars, RVs, and boats. A pollution accident, for example, a leak from a vehicle, can put owners in a vulnerable position; pollution liability offers protection.
Pro Tip: Even if you don’t offer vehicle storage, this type of self storage coverage can protect facilities whose tenants may store things like toxic chemicals, oil drums, and other substances that could cause damage resulting in costly clean-up.
7. Crime Insurance
Despite new and improved security measures, theft at self storage facilities is on the rise across the nation. Since crime-related losses are not typically covered by commercial property insurance, you may want to take out specific crime insurance. Not only does this protect you from theft and robbery, but also dishonest employees, forged or altered documents, and computer fraud.
8. Equipment Breakdown Insurance
Although this can benefit any facility (for example, if you have an elevator), it’s especially beneficial for those offering climate-controlled storage. Should your HVAC system malfunction, equipment breakdown insurance helps cover the cost of repairs or replacement of the equipment, as well as damages and losses to property.
9. Builders’ Risk Insurance
Builders' risk insurance, sometimes referred to as course of construction coverage, protects businesses’ insurable interest in materials, fixtures, and equipment awaiting installation during the construction or renovation of a building or structure. Should these items sustain physical loss or damage, facility owners will be covered. Builders' risk policies (and the projects they cover) are typically available for ground-up new construction, remodeling (including or excluding the existing structure), and installation.
10. Cyber Insurance
It’s easy to think that cyber-attacks only happen to large corporations; after all, those are the stories that make headlines. However, 43% of all data breaches involve small and medium-sized businesses. So, self storage owners, regardless of the size of their facility, should consider cyber insurance.
Cyber insurance generally covers your business's liability for a data breach involving sensitive customer information, such as Social Security numbers, credit card numbers, account numbers, driver's license numbers, and health records. Policies take care of legal fees and expenses and typically help with notifying customers about a data breach, restoring personal identities of affected customers, recovering compromised data, and repairing damaged computer systems.
Offering Tenant Insurance or Protection to Renters
Many rental agreements state that “the tenant assumes full risk for damage or loss of stored goods.” However, if and when there is damage or a loss, it’s becoming more and more difficult to defend this statement in court, especially if the facility owner is found to be knowingly negligent.
Understanding this, many self storage facilities offer tenant insurance or protection. Tenant insurance transfers the risk for tenants’ property to the facility’s insurance provider in exchange for a monthly premium or fee. In tenant protection plans, you as the facility owner assume risk up to the coverage limit, in exchange for payment of additional rent. Self-storage tenant insurance not only provides protection for tenants' stored belongings but also earns you additional cash flow - and tenant protection programs typically offer owners a greater percentage of revenue than tenant insurance. That’s a win-win!
Whether or not you offer tenant insurance or protection, you may require renters to cover their stored property. They can show proof of their own coverage, buy the plan you offer, or purchase some other coverage as a way to protect themselves. Often, a tenant can get a rider added to their homeowner’s or renter’s insurance that will cover their storage unit. Many people don’t like these policies because they typically only cover a percentage of the actual value of the belongings or have high deductibles (sometimes both).
Keep Your Self Storage Facility Covered!
By working with self storage insurance providers that specialize in the industry, you’ll be able to build a robust self storage insurance policy that meets the needs of your business. Remember, just one accident, claim, or lawsuit is likely to outweigh the cost of an insurance premium, so don’t skimp when it comes to coverage. Not only will self storage facility insurance protect you, it’ll also provide you with peace of mind knowing that you, and your tenants’ belongings, are covered under almost any condition.
How Storelocal® Helps with Self Storage Insurance
Storelocal, the first and only self storage cooperative in the world, helps members with insurance in a number of ways.
Storage Choice Property & Liability Insurance Program
The Storage Choice Program provides specially designed insurance products created for the self-storage industry, providing a comprehensive coverage form at a competitive price. The Universal Insurance Team has over 100 years of experience and has partnered with a strong financial insurance partner (A.M. Best A+ XV). Learn More.
Storelocal Protection Program
The Storelocal Protection Program is tailored to the needs of owners and their tenants, offering independent self storage owners superior profit potential. With the Storelocal Protection Program, members keep 70% of the revenue they collect from protection, regardless of how many stores they have (if your facility has the Nokē Smart Entry System, you keep 75% of the revenue collected). Learn more.