THERE ARE MANY DIFFERENT TYPES OF CRIME THAT CAN AFFECT SELF-STORAGE BUSINESSES: burglary, arson, vandalism, drugs and many more. With the various items tenants store in self-storage facilities, it isn't surprising break-ins and theft are one of the most significant ongoing problems in the industry. All storage owners--and their tenants--should be properly insured in case one of these unexpected situations arises.
Even the most well-managed facilities can become victims of crime. According to the 2002 Self-Storage Almanac, an average of 24.6 percent of facilities nationwide reported a theft or break-in to authorities between July 2000 and June 2001. Although the percentage has somewhat decreased over the past few years, self-storage is a unique business that rents space to people from all walks of life. Every facility has the potential of being targeted for crime.
While keeping facilities safe and crime-free should be a fundamental concern for all owners, operators and managers, offering optional tenant insurance is extremely beneficial to business owners and customers. This type of insurance is a specialized coverage tenants can buy to protect their stored property against damage and loss. Tenant insurance is usually not included in a storage owner's policy; however, your insurance company should be able to give you information on how to offer it to customers.
There are many key reasons it is important to offer tenant insurance. The most significant to owners is it limits their liability. Some customers don't understand self-storage is not a warehouse but space rental provided by a landlord. If a customer's property is stolen or destroyed, he may attempt to hold the storage owner responsible. He may sue, even though the lease agreement clearly indicates the self-storage business is not responsible for the loss and damage of his stored property. When facilities have offered an effective tenant-insurance program to customers, courts have been known to reduce the owner's liability.
Tenant insurance can make your customer feel confident about renting space from you. Most people storing items are going through a significant life change, whether they are moving, separating from a loved one, shutting down a business, etc. Offering tenant insurance and educating customers about why it is beneficial to purchase it may put their minds at ease and allow for a more positive rental experience.
Offering tenant insurance may also increase your bottom line. Some insurance providers will pay storage owners a fee for presenting and administering their insurance programs. The fees can differ, but some are pretty high. A successful tenant-insurance program also adds value to a self-storage business. Since administrative fees are considered part of a property's revenue, insuring as few as 100 tenants can add a sizable amount to your property value. Not only are you looking out for yourself, your business and your customer's stored property, you take advantage and make extra money by advertising a need in the industry.
Tenant insurance is usually sold in two different ways. A convenient way for the self-storage owner is through a mail-in program. The insurance company provides brochures and other point-of-purchase materials to distribute to new tenants. Tenants then have the option of filling out requested information and mailing it directly to the insurance company at their leisure. While this is a less aggressive technique that is easier for the storage owner, industry studies show that a smaller number of tenants buy coverage through mail order.
Pay with rent is a more popular way to offer insurance to tenants because you set up the insurance at the time of rental. Coverage usually begins right away, and the premium is collected with the rent each month, making it more convenient and affordable for the tenant. More customers are prone to purchasing this type of insurance because they know the person collecting their money. As consumers, we all have a greater peace of mind when we can see who is providing us services and goods.
