Inside Self-Storage

MAY 2019

Inside Self-Storage (ISS) is an information source for industry owners, managers, developers and investors covering news, trends, facility operation, finance, real estate, construction, development, marketing, technology, insurance and legality.

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Page 17 of 47

W hile the self-storage business is fairly simple, the things that come with it aren't always cut and dried. For example, it's critical for owners to have the right insurance coverages to meet their specific needs, but standard commercial policies can have gaps that leave you and your business vulnerable. When you hear terms like "specialized services" or "specialized coverages," expensive probably comes to mind. The good news is this doesn't have to be the case when it comes to self-storage insurance. In our industry, specialty products can be affordable because the coverages limit risk without forcing you to waste money on things you don't need. All businesses have distinct exposures and risks. The things that make a self-storage business unique are also the reasons you need specialized insurance. Below are some of the coverages tailored to meet your needs and maximize protection of your investment. Well-Known Coverages Most commercial business owners are aware of building and personal-property insurance coverages. These are essential for any property-related claims that may arise, such as a fire caused by faulty wiring or a car crashing though your fence or gate. When purchasing this coverage, owners should look for a policy that includes replacement cost vs. actual cash value. Replacement cost doesn't take depreciation into consideration when valuing a claim. This makes indemnifying Specialized insurance options By Melanie Wichelman Keeping Your business Covered and getting your property back up and running quicker and more efficient. You may also want to look for the ability to have blanket coverage on buildings, which gives you a little more flexibility. Another well-known coverage is commercial business liability. This covers exposures that arise from bodily injury or property damage at your facility. The biggest (and perhaps most common) types of claims in this category are trip-and-fall injuries. Having the correct limit in place will help you avoid paying the large sums that can be associated with these incidents. The above coverages are extremely important to most commercial businesses and required when working with a bank or lender; but there are other familiar policies you may need, such as workers' compensation. If you have employees, this coverage is vital in case one of them is injured during work hours or while on site. States may have different requirements and regulations related to workers' comp, so consult with your insurance agent to determine the best coverage for you. Lesser Known Coverages There are other insurance coverages that are just as vital for a self-storage business but are sometimes overlooked. These are specific to the industry. Customer goods legal liability (CGLL). This provides coverage for claims that arise from damage to or loss of tenant stored property. Though storage operators aren't responsible for the contents of a tenant's unit (this should be clearly stated in your rental agreement, along with a requirement that customers provide their own insurance), unfortunately, situations can occur that create some legal liability and trigger claims. An example would be if a tenant's goods are damaged due to owner negligence. CGLL can cover such claims as well as the related legal costs, even if a claim is determined to be false or groundless. Sale and disposal liability (SDL). Sooner or later, every self-storage owner will be faced with the unenviable task of evicting a tenant for failure to pay rent, reclaiming the space, and removing or disposing of the property. SDL coverage • Buildings and business-personal property • Commercial business liability • Customer goods legal liability • Data compromise coverage • Employee resident-manager personal liability • Employment practices liability • Pollution liability • Sale and disposal liability • Workers' compensation Common Coverages 16 ISS I May 2019

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