Summary: Comprehensive Guide to Self Storage Insurance
Storage units, as an essential service for individuals and businesses seeking secure, off-site storage solutions, inherently carry risks ranging from property damage to theft. This is especially true as storage facility owners and managers have had to adapt to new and emerging threats.
It's crucial for storage unit owners to have comprehensive insurance coverage to safeguard their business and build trust with their clients. Insurance not only protects the physical assets and infrastructure of the storage facility but also covers liability for any injuries or accidents that might occur on the property.
At its most basic, the business of self storage is straightforward. A business owner rents space for customers to use for storage. However, upon examining its operational layers, it becomes clear that self storage operators face unique risks every day.
Self storage insurance is designed to address the unique needs and risks associated with operating self-storage facilities. This type of insurance coverage goes beyond general business insurance, providing specific protections that cater to the nuances of the storage industry.
Most business owners ensure individual storage units are insured by requiring renters to obtain their own policy. According to Forbes, it typically covers off-premises insurance for belongings located away from your house.
However, it is also important for self storage business owners to invest in more comprehensive coverage to protect every facet of their operation. The days when they might fully protect themselves with a simple addition of basic self storage insurance coverages such as Customer Goods Legal Liability and/or Wrongful Sale Liability are history. Currently, there are public self storage insurance risks that can and will expose operators to lawsuits which will threaten your investment’s financial stability.
The cost of self storage insurance for facilities can vary. The final premium ultimately depends on the size of your facility, its location, and other specific risk factors involved, such as crime rates and potential for natural disasters.
Generally, insurance premiums might range from a few thousand dollars to tens of thousands annually for larger facilities or those in high-risk areas. An experienced insurance provider can help to ensure you receive a quote that reflects your unique needs and risks.
The self storage business is a unique model that demands a unique approach when it comes to insurance coverage. There are a number of basic coverage packages that every responsible self storage operator should consider:
With the emergence of new technologies and environmental threats, it’s important for business owners to look for additional coverage based on their needs. This is World’s list of the top updated self-storage coverage options.
Cyber liability insurance is critical to protect self-storage businesses from the rising threat of data breaches and cyber attacks. It covers expenses like credit monitoring, public relations, regulatory fines, and legal defense costs in the event of a cyber incident. This helps to maintain the client trust you deserve.
EPLI coverage protects self-storage businesses against employment-related claims, such as harassment, discrimination and even COVID-19 workplace issues. It covers defense costs and damages, including coverage areas often excluded from standard self-storage policies.
Pollution liability insurance is essential for self-storage facilities, as they may store hazardous materials that could lead to lawsuits due to environmental damage or health issues. This coverage defends against such claims that come from lawsuits related to harmful damages. It’s not to be confused with Pollution Removal, which is a part of property coverage that assists with materials disposal.
D&O liability insurance is crucial if the self-storage business has partnerships or joint ownership arrangements. It protects executives, officers,, and other members from claims related to breach of duties and other exposures that can arise in collaborative business structures.
This coverage protects the self-storage business if an employee gets into an accident while driving their personal vehicle for work-related purposes, such as making bank deposits or attending off-site meetings. It covers liability for bodily injury and property damage. Any employee could cause an insurance issue should that employee simply state they were “on their way to/from work” when any accident occurred. This makes this coverage crucial.
Self-storage policies often have restrictive endorsements related to roof damage, such as requiring a structural engineer's report to prove the roof was disengaged or only providing actual cash value for roof replacement. Securing full replacement cost coverage for the roof is important.
Extending the business income coverage period beyond the standard 12 months is important for self-storage facilities, as it can take longer for them to return to pre-loss occupancy levels compared to other businesses. An Increased Period of Restoration will allow for a longer timeframe for reconstruction. More importantly, an Increased Period of Indemnity provides extended time to rent after restoration is complete.
This coverage ensures the self-storage business is protected if upgrades are required by building codes (e.g., for ADA compliance) when rebuilding after a covered loss, as standard replacement cost policies do not cover these increased construction costs.
From a risk management perspective, the self storage industry is much more involved than simply selling storage space to consumers. Business owners face a wide range of potential risks due to the diverse and often unpredictable nature of their client base. Self-storage facilities must be prepared to handle a near-incalculable number of issues that may arise.
Among the many risks unique to the self-storage business:
The above key public storage insurance coverages play a critical role throughout any claims situation yet must also be carefully and regularly reassessed as your company evolves, expands and prospers.
An experienced, professional self storage agent can and will present your best self storage insurance policy options to protect your all-important investment and keep your business future on the right track.
Learn more about your options for self storage insurance from the experts at World Insurance.