Hazardous Materials Risk at Self-Storage Facilities

Self-storage facility owners and managers have limited control over the items being stored by tenants in their rented self-storage spaces. It’s one of the principles of the self-storage concept and poses one of the chief risk management issues for facilities. Customers who store hazardous materials in their units create a dangerously high risk of potential damage to your client’s property, their property, and the property of other tenants.

The potential peril associated with the storage of hazardous materials is fire. The devastating trend of catastrophic wildfires in the western states and elsewhere are a terrible reminder of the risk that fire represents to businesses, homeowners, and public lands. Hazardous materials stored in a self-storage space have the potential to cause fires, and their presence may make a bad situation worse if the materials are consumed during the progress of a wildfire. A fire that affects a self-storage property can be costly and extremely disruptive to tenants and regular business operations.

The first line of defense against the storage of hazardous materials by tenants is the lease agreement. A well-written lease will include verbiage prohibiting the storage of hazardous, flammable, and toxic materials. It is equally important for managers to point out this verbiage to potential customers during the leasing process, particularly when renting to commercial tenants.

While any tenant may attempt to store hazardous materials in a rented unit, commercial customers such as construction companies, landscapers, roofers, painters, mechanics, and janitorial service providers may be more likely to use and store hazardous, flammable, or toxic materials at a self-storage facility. Managers should be trained to look for signage on containers and ask additional questions of tenants they believe may be renting space for commercial use.

The next line of defense is the on-site managers. They are the “eyes and ears” of the operation and have daily interaction with customers. Managers need to be thoroughly trained to discuss hazardous materials with tenants and to recognize and appropriately act on unacceptable tenant behaviors. A key preventive measure is completing daily premises inspections with a focus on new tenants who are moving in and tenants who frequently visit their units.

While confronting a tenant directly may not always be safe or advisable, encouraging managers to make a point of being visible when tenants are on the property can yield benefits from both a risk management and customer service perspective. A manager who stops by a unit to say something like, “Hi, I just wanted to make sure you’re doing okay,” communicates to the tenant that someone is watching. Most people will perceive this as good customer service, and those who don’t will get the message that this self-storage facility is paying attention to tenants’ activities.

It is also important for a self-storage business to stay in communication with its tenants about facility policies including the prohibition against storing hazardous materials. This can be accomplished in many ways including inserting reminders in invoice mailings or including a message in electronic invoices or the facility’s newsletter. Another simple way to enhance awareness is to place signs around the property indicating that hazardous, flammable, and toxic materials are not permitted on the premises.

As an insurance agent, you are valuable resource for your self-storage clients by providing input and perspective on the lease terminology, legal considerations, potential liability exposures, and the development of a training program for facility managers. In addition, MiniCo’s website offers safety and loss control resources such as the MiniCo Safety Shorts video series. The “Tenant Safety Checklist” video illustrates a number of tenant behaviors that may violate lease regulations. The MiniCo Safety Shorts video series is available at www.minico.com/safetyvideos.

Mike Schofield
President and CEO

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