Purchasing or renewing the insurance policy on a self-storage business is an interactive process involving the independent insurance agent, the business owner, and the underwriter. Once the policy is accepted and coverage is bound, the business owner is all done for another year, right? Not necessarily.
The insurance policy documents contain verbiage somewhere that gives the insurance company the right to inspect the self-storage property and operations. The insurance industry refers to this process as loss control underwriting surveys and inspections. What this means for the business owner is that the insurance company may send a loss control expert to visit their business, typically within 60 days after the policy has been bound, to inspect the operations and identify any hazards or exposures that may increase the risk of a loss or claim.
If your client gets a request to schedule such an inspection, it is important to understand how the process works, things the business owner can do to prepare for the visit, and how to respond to any recommendations made as a result of the inspection.
- Take the inspection seriously.
- Working together with your client, identify the lines of coverage to be included in the inspection and the items, documents, and data that need to be made available for the visit.
- Make sure you and your client have a clear understanding of when the visit will occur, when you will receive the inspector’s report, and the deadline for complying with any recommendations.
During The Inspection
- Be friendly, professional, and cooperative, and expect the same from the inspector.
- Stay with the inspector throughout the visit.
- Ask questions and discuss any issues that come up during the inspection.
If the business owner receives recommendations outlining corrective measures that should be addressed as a result of the inspection, consult with your client and respond promptly in writing to the insurance company with a copy provided to both you and the business owner. Acknowledge each recommendation and briefly explain how the business owner will comply with timelines for targeted completion. If a recommendation seems impractical, it may be challenged as long that is done immediately. Whatever happens, do not delay. If critical recommendations are not addressed, the insurance company could take the position to cancel the policy within a regulatory time period.
Be sure to explain to your client that having a loss control professional identify potential risks and exposures before a loss occurs is a valuable benefit for the self-storage business. Ideally, the process will help minimize risk, continue operations without disruption, and reduce the risk of costly claims and lawsuits.
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