As we enter a new year, it can be helpful to review the types of claims reported by self-storage facility owners across the country during the past 12 months to help you assess your own risk of loss. As you will see, many of the kinds of claims filed were at least partially preventable. The fact that 2001 will be remembered for relatively stable claims activity is a good indicator that facility owners as a group are becoming increasingly aware of the hazards inherent in running a self-storage operation and are taking proactive measures to help guard themselves against loss.
Lightning-Induced Power Surges
The most common type of claim submitted by facility owners in 2001 was for equipment damage, primarily security systems, due to lightning-induced electrical power surges. However, there were a number of claims for damages to computers, fax machines and other office equipment as well. At least some of these losses could have been prevented had surge protectors been in use. Also known as lightning barriers, surge protectors provide a first line of defense against electrical damage by instantaneously clamping down on power surges and diverting them harmlessly to ground. Even in cases where no outright equipment failure may occur, the life of electronic equipment can be significantly reduced following a lightning surge, and surge protectors can significantly extend that life.
Damage to Tenant Property
Another common claim in 2001 is property damage to others' property--for example, a gate closing on a tenant's vehicle. This type of claim is normally covered by business-liability insurance, which covers those amounts you become legally obligated to pay for damages to other's property; injuries suffered by tenants or visitors while on your premises; personal-injury lawsuits involving libel, slander and physical eviction of a person; and false arrest. For best protection, liability limits of $1 million or more are generally recommended even for the smallest of facilities.
Sale-and-Disposal Legal Liability
Nearly every state has specific statutes that govern the sale-and-disposal process. However, if the procedures are not followed to the letter, or if there is an error in any step of the process, the self-storage operator leaves himself vulnerable to lawsuits claiming loss or damage of stored goods. In 2001, we handled numerous claims arising from the negligent sale, removal, disposal or disposition of customers' property when reclaiming space for which rental or other charges are delinquent or unpaid. If you or your staff are involved in the sale-and-disposal process, you must be aware of lien law. Consult with an attorney about preparing a written procedure that outlines the exact steps for disposing of a delinquent tenant's property. Read and follow all state statutes to the letter. Note also that sale-and-disposal legal liability provides for defense and legal costs, even if a customer's suit is groundless or fraudulent.
Remember, no matter how large or small your self-storage facility may be, securing adequate coverage is essential for protecting your business and your peace of mind.
David Wilhite works for Universal Insurance Facilities Ltd., which offers a complete package of coverages specifically designed to meet the needs of the self-storage industry. For more information on Universal's coverages, or to get a quick, no-obligation quote, call 800.844.2101; fax 480.970.6240; e-mail uif@vpico.com; visit www.vpico.com/universal.
