If you have self-storage clients, it’s a smart move to make sure they offer a tenant insurance program to their tenants. Why? As an insurance agent, you are in the ideal position to educate your clients about minimizing the risk of claims and lawsuits. Self-storage facilities that don’t offer tenant insurance are missing out on a simple and effective tool to help reduce liability exposure while providing a valuable customer service for their customers. Some tenant insurance programs even provide an additional revenue stream for the self-storage business. Here’s a breakdown of the benefits and protections that tenant insurance can provide for your clients who own and operate self-storage facilities.
What is Self-Storage Tenant Insurance?
Self-storage tenant insurance programs are primary policies that provide replacement cost coverage for a wide range of items kept in a rented storage unit. MiniCo’s tenant insurance programs include coverage for loss due to rodent/vermin damage, fire, smoke, burglary, lightning, windstorm, hail, water damage, earthquake, building collapse, explosion, vandalism, and riot. For some programs, the tenant deals directly with the insurance company and is billed monthly until policy cancellation. Pay-with-rent programs are administered by the self-storage facility, and the premium is included in the monthly unit rental fee.
Why Do Tenants Need Insurance for Stored Items?
Self-storage tenants may be unaware that the items they store in a rented unit are not automatically covered under the facility’s insurance policy. The language in the lease agreement spells out that the facility is not responsible for insuring tenants’ stored goods, and facility managers should take the time to explain to new renters that they are responsible for insuring their own items. Increasingly it is becoming standard practice across the industry to require evidence of insurance at the time of lease. Customers will be required to provide a copy of the declarations page for their homeowner’s or renter’s policy that proves coverage for items kept in a storage facility. Tenants who do not have such a policy are given the option to purchase the tenant insurance offered by the facility.
Many self-storage tenants purchase stand-alone insurance for their stored belongings even when they have homeowner’s or renter’s coverage for a few important reasons.
- Tenant insurance policies typically offer higher coverage limits than a standard homeowner’s or renter’s policy at an affordable premium. MiniCo’s tenant insurance programs offer coverage limits from $1,000 to $75,000.
- Making a claim for stored items insured by a stand-alone tenant insurance policy typically means no out-of-pocket exposure for the policyholder. MiniCo’s tenant insurance programs have a $0 deductible – that’s not the case for a standard homeowner’s or renter’s policy that may carry a deductible of $250, $1,000, or more.
- Claims made against a tenant insurance policy are not reflected in the customer’s homeowner’s or renter’s insurance claim history. Any claims made on a standard policy for homeowners or renters will be considered when it comes time to renew the policy, meaning those premiums could increase or the policy could be nonrenewed.
How Does Tenant Insurance Benefit the Business Owner?
Let’s get back to why you as an insurance agent or broker should encourage your self-storage clients to offer tenant insurance. First of all, it’s a value-added customer service for their customers. Tenants need insurance for their stored belongings, so having a program available at the time of lease makes it quick and easy to get coverage. Even more importantly, the act of offering tenant insurance to a storage customer provides liability protection for the business owner.
MiniCo’s tenant insurance policy includes a Tenant Responsibility Addendum, a legal document that is included as part of the storage customer’s rental contract. The self-storage facility, via the manager or website, is responsible for explaining the need for insurance to the customer and offering the tenant insurance application. If the customer declines the coverage, they are required to sign the Tenant Responsibility Addendum that states that they understand their property is not insured by the self-storage facility, they acknowledge that tenant insurance has been offered to them, and they are electing to decline coverage. In the event that an uninsured tenant makes a claim or files a lawsuit against the facility for loss of stored property, the addendum is powerful documentation that the liability rests with the storage customer and not the business.
When your self-storage insureds offer tenant insurance to their customers, it’s a win-win for the business and its tenants. Whether your self-storage clients are large multi-location operations or smaller mom-and-pop businesses, educating them about the value of offering tenant insurance is a worthwhile conversation to have during your next policy review.
Click here for more information about MiniCo’s tenant insurance programs.