New Year, New Risks: It’s Time for an Annual Insurance Review

The first quarter of the year is an ideal time to schedule a detailed coverage review with your clients who own self-storage businesses. Since the review does not need to correspond with the policy expiration date, reaching out to these clients to set up an appointment is an excellent customer service opportunity. The goal is to discuss their existing insurance coverages, limits, and deductibles and changes that may require adjustments to the existing policies.

When discussing any changes that were made to the business in the previous year as well as the owner’s future plans, it can be helpful to remind the client of the role that you play in representing the self-storage operation to insurance underwriters. This review is important so that you can identify exposures and recommend coverage, but it also provides information that will be vital during negotiations with the underwriter during the renewal period. The more detail your client shares with you, the better you can negotiate on their behalf to obtain favorable premium pricing and policy terms.

Changes that need to be discussed during the coverage review include the following.

  • Purchase of vacant land
  • Purchase of new locations
  • Development and construction
  • Addition of square footage (new units and buildings)
  • Addition of a cell tower
  • Staff changes (increase or decrease)
  • Addition or upgrade of security equipment (lights, gates, keypads, cameras)
  • Roof upgrades and current inspection report
  • Lease changes (requires legal review)
  • Third-party contracts (requires legal review)

The last two items on the list above, lease changes and third-party contracts, should be reviewed by both the client’s insurance agent and attorney. Leases and third-party contracts may expose a self-storage operation to specific risks and insurance requirements that need to be addressed. An attorney also will ensure that a revised lease complies with current statutes and will review third-party contracts to ensure favorable wording of hold harmless and indemnification clauses.

You may wish to discuss a few specific coverages that offer significant value in terms of premium cost and the level of protection provided as compared to the potential negative impact on the operation’s bottom line in the event of a loss. Cyber insurance is becoming a critical coverage for businesses of every size as a protection against the mounting costs of recovering from a data breach, cyber “ransom” demand, or denial of service attack. Building ordinance and business income coverage offer protection in the event of damage to buildings and business interruption, and employment practices liability provides coverage for claims of wrongful employment practices.

Mike Schofield

President and CEO

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