James Appleton, MiniCo Insurance Agency, LLC, Director of Sales, Special Risk
When it comes to customers’ stored belongings, industry
professionals jest that tenants store junk but lose heirlooms. In other words,
the items they place in storage don’t seem to have any value to them until
there is an event in which those (oftentimes forgotten) goods are either damaged,
stolen, or deemed unsalvageable.
While utilizing high-tech security systems, professionally written
rental agreements, climate-control features, and pest-control products are
prudent practices, the wisest of self-storage owners and operators know that
mishaps still happen. Natural disasters, fires, and burglaries are just a few
of the countless catastrophes that can expose your self-storage business to
One way to protect your tenants’ possessions—and your facility’s
reputation—from unforeseen events is to implement an insurance requirement.
That is to say, all renters would be required to either provide proof of
coverage from their current homeowner’s or renter’s insurance or obtain tenant
Assurance From Insurance
Although the majority of self-storage owners and operators have a clause in their storage lease notifying renters that they are not responsible for stored goods in the event of a loss, that doesn’t prevent disgruntled tenants from attempting to obtain compensation for damages. Moreover, according to James Appleton, director of sales, special risk for Phoenix-based MiniCo Insurance Agency, LLC, having tenants assume the risk is not advantageous for the facility or its customers.
“If there is a loss, the tenant has nowhere to go but to the
operator,” says Appleton, who recommends that all tenants have evidence of
insurance to rent storage units. “It’s in the best interest of consumers to
work with an insurance product. Tenant insurance is good for both operators and
There’s no denying that tenant insurance can provide peace
of mind to renters as it protects their belongings, but, as Appleton notes,
it’s beneficial to facility owners and property managers as well.
“It protects a facility from liability,” he says, adding
that owners and managers don’t have to deal with angry tenants as they are dealing
directly with the insurance company and its claims department, adjustors, and
insurance professionals. “It separates tenants from a relationship with the
The separation of accountability that Appleton mentions
typically leads to a more understanding mindset during the aftermath of an
incident as tenants have assurance that their insurance provider will cover a
Options And Benefits
As stated previously, self-storage operators can give renters the choice to opt out of securing tenant insurance by presenting evidence that their homeowner or renter’s insurance policy covers goods stored off their property. However, if an incident occurs, the tenant would have to pay a deductible. Plus, filing a claim could cause their monthly insurance premium to increase. Homeowner and renter’s insurance policies have sublimits on certain items as well.
“People don’t read documents fully,” says Appleton, “and
they’re not fully protected—even if they think they are. Giving them an option
is good, but tenant insurance guarantees that renters are protected.”
Self-storage tenant insurance programs, such as the ones offered
by MiniCo Insurance Agency, is specifically designed for self-storage tenants
and an additional revenue stream for self-storage facilities. The company, which
first introduced customer storage insurance to the self-storage industry in
1974 and is a national leader in the industry today, has two unique tenant insurance
programs available: TenantOne Direct and Pay-With-Rent tenant insurance.
According to Appleton, TenantOne Direct is a good option for self-storage
owners and operators who don’t want to be involved with the paperwork that goes
along with signing up customers for tenant insurance. “It’s our
over-the-counter program,” he says. “Tenants deal with the insurance company
Essentially, operators who choose this route are distributing
pamphlets about the tenant insurance program to customers who do not have a homeowner
insurance policy or want additional coverage for their stored items. While
TenantOne Direct doesn’t yield a financial benefit for the self-storage
facility, it does help ensure that renters won’t appeal to the facility for
compensation if their belongings are spoiled.
Per the program’s informational flyer, TenantOne provides
affordable insurance coverage for these causes of loss: burglary, lightning,
windstorm, hail, building collapse, explosion, vandalism, riot, fire, smoke,
earthquake, water damage, rodent or vermin damage, and transit damage within a 100-mile
radius of the facility. With MiniCo’s self-storage tenant insurance, there is
What’s more, the insured receive no negative marks on their
history for filing a claim as MiniCo does not report claims to any claims
bureau. Its insurance policies are available in all 50 states and the District
of Columbia, and they are legally regulated by the Department of Insurance. “Regulation
makes people feel more comfortable,” Appleton adds. “Tenants are issued an actual
insurance policy; that’s another benefit of working with an AMBest “A” rated insurance
Similar to other types of insurance policies, the tenant’s monthly
premium is based on the limit amount they select to cover their stored goods.
Self-storage operators who are seeking an additional source of
income with minimal administrative effort may want to offer the Pay-With-Rent
tenant insurance program to their tenants. While it offers the same benefits as
the TenantOne program, the Pay-With-Rent program enables tenants to do exactly
as its name implies: Pay the monthly tenant insurance policy premium along with
the monthly storage bill instead of making two separate payments.
Appleton says this option is ideal for operators who “want to streamline
operations and not deal with tenants if there is a loss”. With MiniCo’s
Pay-With-Rent program, operators obtain a limited lines license, if required by
their state, and receive commission or an administrative fee on the policies
they sell. The revenue can even be received in two different ways, depending on
the storage operator’s preference. There is an upfront option that pays
commissions as they are earned or a captive option, which Appleton says is more
of a long-term investment strategy where revenue distribution is basically
controlled by the operator. While the revenue varies by operation, selling
tenant insurance can become a significant source of income with motivated and
trained managers on board.
Speaking of managers, MiniCo Insurance Agency provides
professional training for its Pay-With-Rent tenant insurance program. “The
training material is not ambiguous,” Appleton says. “The manager training is
approved and signed off on.” This means, after completing the training course,
self-storage managers have the knowledge and confidence to properly sell the
tenant insurance to customers.
All things considered, limiting your liability should be at the top of your to-do list as a self-storage owner/operator. The future success of your storage facility relies on your ability to protect it from potential lawsuits, resentful tenants, and a sullied reputation—any of which could quickly turn a profitable property into a bankrupt business.
Erica Shatzer is the editor of Mini-Storage Messenger, Self-Storage Now!, and Self-Storage Canada.