
The storage facility under the flag
Airport Road Self Storage on Insurance
The concept of insurance has evolved to where it is one of the more effective ways to manage important parts of life-especially business life. There are a number of issues that arise: risk, loss, liability, which lead to necessary insurances. Risk is one part of business-life that everyone involved has to deal with. It is inescapable. What does risk mean in the Self Storage business?
Well there are at least two sides. There is the facility itself, whether referred to as a mini-warehouse, mini-storage or the more correct self storage. Also there is the renter or person storing their personal property: all the stuff that accumulates. The insurance needed is different in each of these two sides.
The owner of the facility needs to insure against loss, or damage, to the facility. Although the loss rates for storage facilities are universally low, the investment is large and must be protected. In most cases the owner has made this his life’s work and quite often has used funds from a bank loan to construct the facility. The bank also needs to protect against the risk of losing its investment.
So facilities are insured against fire, floods, vandalism, earthquakes, and now even Acts of Terrorism. Any business, storage facilities included, also must be insured for liability. Unfortunately bad things can happen to nice people every day. People can fall or get otherwise injured and the facility owner needs to plan for this type of risk. There are also other needs such as loss of income, but loss and liability are the bigger risks .
What about insurance for the self- storage renter? The renter needs to insure against the loss or damage to the personal property he is storing. That is the renter’s responsibility in a self storage facility. The renter has little risk of liability so that is not a concern, but if the renter values his personal property then the renter must insure his property against loss. The facility is not responsible for personal goods. That is why it is a self storage facility and not a warehouse. This is an important difference and often misunderstood. It isn’t really illogical, and can be simply explained.
Think for a moment about what happens in an apartment building. Lots of people rent an apartment. Who insures your property in your apartment? It is not the apartment owner. It is the renter. So you buy renters insurance or personal property insurance. It’s not any different from self storage. Another issue to consider is that the storage facility owner and the apartment owner have no idea what the renters will put in the apartment. It could be almost anything and responsibility for it would put the facility owner at risk. Responsibility on the part of the owner would also create a hassle for renters because the facility owner would need to check each rented unit for undesirable usage.
The best option is for the renter to buy renters insurance or make sure with an insurance agent that renter’s homeowners insurance covers his personal property while it is stored outside the home. I am told that homeowners’ insurance most often do but I am not an insurance agent. This is how the risk is managed in the self storage business. The facility is covered by insurance and the facility owner and the renter have their own part to play.