MiniCo Insurance Agency Publishes Tenant Insurance Best Practices
To better differentiate the
various financial products targeted to self-storage customers, Phoenix-based
MiniCo Insurance Agency has published a list of best practices for offering
tenant insurance. MiniCo’s best practices address regulatory requirements,
program selection, carrier rating, lease agreement, manager training, and
MiniCo was founded in 1974 with
tenant insurance as its sole product, and MiniCo President and CEO Mike
Schofield wanted the company to
be a leader in setting the standard as the industry resource to assist
self-storage owners in the professional management of a tenant insurance
program. Best practices provide guidelines for efficient operations within the
confines of insurance regulatory requirements.
“There has been significant
dialogue in the self-storage industry on the topic of financial products and
models being marketed to protect a tenant’s stored property,” Schofield
says. “As one of the pioneers in offering the tenant insurance model to the
industry, we thought the creation of best practices for managing and offering
tenant insurance was long overdue.”
Schofield says some of this dialogue has led to a
misunderstanding about tenant insurance, protection plans, and captive programs.
“We are trying to provide guidance in the tenant insurance program and bring
some clarity and consistency throughout the industry and hopefully eliminate
some of the misunderstanding between the various products that are available,”
During the past four decades, MiniCo
Insurance Agency has developed multiple insurance models and products to
address the specific needs of self-storage operations. MiniCo has aligned its
operations with highly rated insurance carriers that have a reputation for
paying claims and serving customers properly.
“MiniCo’s customer storage
insurance products have served the industry and the tenant well for many years
by responding to the tenant at the time of a loss,” Schofield says. “It has
been a product that has historically protected the reputation of the industry
by doing what the insurance product was designed to do: pay claims for covered
Self-storage tenant insurance is offered with a contract
through an insurance carrier, which absorbs the risk without putting any
liability on facility management. Owners and managers are not liable for losses
with tenant insurance.
The insurance company typically provides all the marketing
materials, customer documentation, employee training, policy issuance, and
Guidelines For Operating Safe And Secure Facilities MiniCo’s best practices encompass more than two dozen recommendations not only for offering tenant insurance, but also for operating a safe and secure facility and reducing liabilities for owners.
“Our goal is to equip owners with the information they need
to better operate their business and reduce liability,” says James Appleton,
MiniCo’s director of sales and special risk.
The best practices outline the regulatory requirements for
self-storage operations in offering tenant insurance such as MiniCo’s Pay-With-Rent
and TenantOne Direct products.
While a limited lines insurance license is required in
certain states to offer tenant insurance at a storage facility, Appleton notes
that a property and casualty license and background checks are not required.
Facility managers have said the limited license is not difficult to obtain,
requiring only a minimal amount of paperwork to acquire and at a reasonable fee.
recommends selecting a tenant insurance program that utilizes an A.M. Best
“A” rated carrier. “That indicates the financial stability of the carrier
and the ability to pay claims,” Appleton says. “We want to align ourselves with
a financially sound carrier that has the ability to fulfill their obligation
(to pay claims).”
practices address several elements of the lease agreement, because this
document provides legal protection for both tenants and owners and limits the
MiniCo suggests that the lease include a provision explaining
that the facility does not insure the tenant’s property and tenants are
required to provide evidence of insurance on stored property.
The lease should include a limitation of value and
non-bailment provisions to explain the tenant’s responsibility in the event of
a loss. The lease should state that the owner has no care, custody, and control
of the product being stored in the unit.
“As a self-storage operator, you are not taking possession
of goods so the operator has limited liability on what you put in that space,”
utilize lease language that places a value provision on stored goods—usually a
maximum of $5,000. That’s an effort to contractually bind the tenant to
acknowledge that the worth of stored goods will not exceed the value limit.
This can mitigate the operator’s financial exposure and precludes the
tenant from claiming that expensive collectibles, jewelry, or heirlooms were
damaged or stolen from a storage unit.
MiniCo also advises lease agreement verbiage that discourages
tenants from storing explosives or highly flammable material or any hazardous
Many state associations produce model leases that directly
mirror the lien laws in their respective states. By adopting model lease
agreements, owners can reduce their legal liability in the event of a lien
sale, as long as proper procedures are followed.
Best Times To Offer Insurance The best practices also recommend offering tenant insurance at the time of lease signing. “We recommend evidence of insurance, so at the time someone leases a unit, they either need to present some form of insurance certificate or the declaration page of their homeowners or renters policy to show they are accepting liability for their goods, or they can select from the various coverages the facility offers through a tenant insurance program,” Appleton says.
“Your conversion ratio is going to be much higher in doing
it at the time of leasing,” Schofield adds. Generally, a higher percentage of
new customers sign up for insurance at the time the rental agreement is signed versus
those who delay coverage. Limiting
the offer of insurance at the time of lease also limits the opportunity to
purchase the insurance subsequent to either loss or damage of the stored goods.
Some managers discuss the insurance during walk-through as
they are showing units, and others mention it when prospective tenants
initially call the office. Some facility websites also have the insurance notice
displayed prominently on their home page.
Another important practice is to have a property management
software program that integrates insurance activity and reduces handling for
managers and staff. Some software is designed to auto-populate information
fields of the insurance application, saving the manager’s time.
At the time of rental and insurance sign-up, the software
program will track the transaction and then generate an insurance activity
report and automatically calculate the facility’s commissions at the end of the
month. Some programs will contact the insurance agency immediately after the
customer signs up for coverage and a policy is issued electronically.
“The software captures
significant efficiency within the process,” Schofield says. “It eliminates errors
and provides better service to the tenant and operator.”
Taking Preventive Measures Risk management is a key ingredient of best practices. This includes maintaining appropriate security systems to protect tenants’ goods as well as preventive measures to keep employees and customers safe.
Proper fencing, security cameras, signage, and other forms
of communications are critical components to risk management. It also includes
the human element, where a manager performs daily lock checks and general
inspections of the entire premises.
“Your objective is to create a deterrent visually and also
have various security equipment in place,” Schofield says. “It’s all an effort
to not only provide security for
the tenant’s stored goods but also to mitigate assaults, break-ins, and
slip-and-falls. If you don’t have proper lighting, people could be step in
potholes or trip over curbs. All those create expenses associated with the cost
A broad risk management program along with insurance provide
a safe environment for tenants’ goods. “Many of the things that are going to
impact safety and security of the tenant’s stored goods also are going to
impact overall risk management of the entire facility,” Schofield notes.
For example, security cameras and electronic locks are
becoming more sophisticated and are designed to deter burglars as well as
prevent certain calamities. New electronic locks now incorporate heat sensors
that can actually notify the local fire department should temperatures inside a
storage unit reach dangerous levels.
“If you can have the fire department on location from
notification of heat rising in a certain area, you can hopefully eliminate the
severity of the type of claims that occur from fires,” Schofield says.
Tenant insurance generally includes standard property coverage, including
fire, smoke, burglary, lightning, windstorm, hail, water damage, earthquake,
building collapse, explosion, vandalism, rodent/vermin damage, and riot.
MiniCo’s best practices also recommend providing training to
employees on disaster protocols, tenant notification, and the owner’s right to
restrict access following a calamity. It is also advisable to encourage tenants
via ongoing communications to inventory, photograph, and document the contents
and value of their stored items.