Self-Storage Insurance: Learn from Public Storage’s Bad Press

August 3, 2011 5
Self-Storage Insurance: Learn from Public Storage’s Bad Press

The self-storage world is not known for controversy. It’s usually pretty silent, compared to the scandals that erupt in, say, the film and music industries. But the topic of self-storage insurance leaves a bad taste in many people’s mouths.

In the past nine months, both CBS Atlanta and CBS San Francisco have written about Public Storage’s misleading insurance policies and the difficulty renters face when filing a claim. This negative PR has tainted the Public Storage brand. More concerning, it gives the self-storage community a bad name as a whole. That’s why I’m initiating a much-needed discussion on the matter, in the hopes of creating some transparency and consistency.

You should not require that tenants purchase your insurance package.

Many of you want to do well by your customers, to ensure they’re not left out to dry should their belongings be subject to catastrophe. But instead of mandating that tenants buy your insurance, simply require some proof of existing insurance coverage.

For the most part, homeowners’ or rental insurance will cover stored items. Several companies automatically provide it with their original coverage policy, meaning that forcing customers to buy your insurance wastes their money. Others ask their clients to buy an add-on that covers stored items. Either way, your tenants are generally better off dealing with their own insurance companies.

Storage-specialized insurance agencies tend to be stingy. It’s extremely difficult to get them to pay up. Tenants’ claims for common incidents like water damage, pests and mold are flat-out rejected. Willis, Public Storage’s insurance partner, even denied a customer when belongings worth $12,000 were stolen, despite clear proof of forced entry.

Should you choose to sell insurance at your facility, carefully read the fine print to understand what your packages cover. Also ensure that you are not selling insurance without a license. According to CBS San Francisco, Public Storage was illegally doing so. Finally, recommend that tenants call their current agent before buying your insurance, to determine what their existing policies cover.

Be clear and consistent, regardless of your policy.

Whether or not you require tenants to provide proof of insurance coverage, make sure your policies are consistent. Print your policy explicitly on leases, and make sure all of your employees are on the same page.

Public Storage recently ran into this problem. The company’s leases state that insurance is the tenant’s sole responsibility, yet employees require that tenants buy insurance with their unit rental. When questioned, on-site staff stated they felt uncomfortable with the order of operations, and blamed the corporation and their district managers.

Journalists naturally had a field day with this finger-pointing. These articles are certainly embarrassing for the company. Use what happened to Public Storage to your advantage— they’re likely one of your biggest competitors. If your facility has a consistent, transparent self-storage insurance policy, customers will likely choose you over Public Storage.

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  • Kurt Novak

    Selling storage insurance is a typical upsell to increase the profit of a storage locker. It is the same like the collision insurance offered by rental car companies, who scare you into buying insurance, although you have coverage from your regular auto policy.

    I believe customers of storage facilities must be specifically made aware of the fact that they are liable for their belongings and that the facility will not pay for their loss. I would assume most people don’t read the agreement, so this gives you as the operator an opportunity to offer insurance.

  • Christina

    Kurt, thanks for your input!

    We think that just because selling self-storage insurance in this manner is currently standard industry practice doesn’t necessarily mean it’s the best thing to do. That’s why writing this article was so important, in an effort to develop some kind of discussion on the issue.

    While self-storage insurance does increase your profit margins, consumers should be more clearly advised that their homeowner’s insurance likely covers stored items. They’ll appreciate you for it, and when they have a good storage experience, they’ll recommend your facility to friends and family in the future.

    I agree with you that customers should be made aware of their liability. I think that it follows the message we want to portray – no matter what your policy is, you should be very clear and consistent about it. Otherwise, you risk the kind of negative PR that Public Storage has recently received.

  • Regina S.

    I find that many customers are in a big hurry when they come in to rent their units and don’t want to take the time to check with their insurance companies before renting their storage units. We let them know to check with their homeowners/renters/business insurance policies and get a declarations page back to us as soon as possible. In the interim, they can take our minimum coverage available for the first month and then we will cancel it after they have time to provide us with their own policy information. We have also found that having them contact their insurance agent right while they are in our office and getting them to fax/email their coverage over to us works great as well. One side note, there are some insurance companies that do not include items while in storage and some people have found it cheaper and more beneficial to go with what we offer. Ours also offers a zero deductible if a cylinder lock is used on the unit. Either way, I feel better knowing my tenants are insured whether is is through their own policies or ours.

  • Suzie

    We have owned 2 facilities for 12 years and we have always had our tenants sign a lease addendum verifying that they are aware that none of their stored items are insured by the facility. The form makes them state whether they are self insured or have their own insurance. We have put the responsibility of insuring their goods back on them. The lease addendum makes them aware of what the contract states…we re-iterate it in an addendum because as you know, no one reads the contract. We also hand out brochures from different insurance companies to the customers but allow them to decide what they want to do.

  • Neighborly Jim

    It burns me up that self storage places require insurance. If I do not want to insure my belonging then that should be my choice, but to require me to buy insurance is something that is not acceptable to me. And no, I do not have home owners or renters insurance, I do not want it.

    My solution was to not use self storage at all but to get a shed and place it in a family members back yard for a couple of months and store my stuff back there in plastic tubs. At the end of it, the family member kept the shed and the whole thing cost me less money. I am once again in need of temp storage but I will NOT use self storage because they try to force insurance on people for the sole purpose of making more money. I would rather they be honest and say that I will pay 70.00 a month instead of 60.00 plus 10.00 in insurance. It is the underhanded and deceptive practice that I take issue with.