You have to buy insurance when you own or operate a self-storage facility, but you can take steps to make sure you’re getting the biggest bang for your buck.
Karl Newman, president of the NW Insurance Council trade group in Seattle, WA, said self-storage owners typically save money on insurance by managing their risks.
For example, you typically can save on property coverage if you’ve done things to protect your facility from break-ins, Newman said. “Security cameras, security guards and alarms system definitely can save you money,” he said.
It also helps to have regulations in place that promote safety and reduce the chances of lawsuit-triggering injuries. For instance, make sure your driveways and hallways stay clear of debris that could cause someone to trip and fall.
The amount that can be saved through risk management varies widely and depends on a variety of factors, such as the value of your property, the rate of crime within your neighborhood and your own history of filing insurance claims.
Insurers think that a strong police presence at a self-storage facility decreases the chances of break-ins and vandalism. Chris Nelson, supervisor of the new-business team at MiniCo Insurance Agency in Phoenix, AZ, said some facility operators cut property insurance costs by letting police officers train drug-sniffing dogs on their property.
Here are five pointers for saving money on business insurance.
1. Don’t buy too much insurance.
It’s good to be adequately insured, but if you buy more coverage than you need, you’ll be wasting money. When you calculate how much property coverage you need to rebuild or repair your facility, you normally can count on spending $30 to $35 per square foot, Nelson said. Insuring for more than that might not be wise.
Furthermore, be sure you don’t have any coverage that makes no sense for your facility, Nelson said. Your insurer can help you figure out what’s necessary and what’s not.
2. Shop around.
Insurance is a highly competitive business, said Jim Armitage, an insurance agent in Arcadia, CA. If you shop for policies annually, you’ll find out whether better deals are out there.
As you compare policy costs from different providers, make sure they offer similar benefits, he said. If the price tag seems too good to be true, the policy could lack key benefits.
3. Consider raising your deductible.
A great way to reduce your insurance premiums is to raise your deductible. If you have a low deductible of $1,000, insurers will anticipate more claims and charge you accordingly. If your deductible is $5,000 or more, you’re agreeing to handle small repairs yourself and not file claims for minor property damage.
Your goal should be to carry protection for catastrophic losses, not routine maintenance, Armitage said. Be sure to pick a deductible that you’ll be able to afford if you need to file a claim.
4. Pay your bills on time.
Insurers say statistics prove that people who pay their bills late are more likely to file insurance claims. Because of this, people with poor credit histories tend to pay more for business insurance. To make sure this doesn’t happen to you, review your credit record and work to build a solid history of timely bill payments.
5. Look into a business owner’s policy.
You often can cut costs by consolidating business coverage into a single policy, Newman said. “Commercial insurance can be customized to meet your needs,” he said.
A business owner’s policy (BOP) typically features these core protections:
- Liability coverage. This policy will cover your expenses if anything you or your employees do causes property damage or injuries to your tenants. It also will pay claims if you’re found to be liable for injuries to employees.
- Property coverage for buildings and contents. This pays for such things as vandalism, fire damage and theft.
- Business interruption insurance. A fire or a broken water pipe can put you out of business temporarily. This coverage will offset your loss of income if business is disrupted.