Self Storage- Insurance

[Henry Clark]

Had a conversation with our insurance provider.

1.  On another post someone said they use locks with a master key for all customers.  This makes you a warehouse and not Selfstorage.  You then take on new liability on the contents and any physical issues inside the unit.

2.   Rates have gone up, why?  He said it is due to the increase in material costs. A lot of new construction drove material prices up. Plus Covid shortages.   Thus rates went up to cover increased costs.  He expects premiums to normalize in the future but does not see it occurring soon.  

3.  Weather.   Unless you have a really large facility he doesn’t see Florida and parts of Texas being able to support the insurance premiums on a small facility due to hurricane issues recently driving up premiums. 

[Jason Bott]

Quote from @Henry Clark:

Quote from @Jason Bott:

@Henry Clark #1 sounds to be a carrier specific underwriting guideline.  We haven't run into that stipulation with the Midwest carriers.

Insurance on any Property coverage (Commercial, Industrial, Homeowners) is taking a rate hike nationally in 2023.  All reports point to this trend to continue through 2024.  The % rate increase will depend on how good/bad the natural disaster are for the rest of 2023.

 If you could Ask your carriers the difference between bonded warehouses, warehouses and self storage coverage.  Do they view liability different between the three.   Thanks. 

Henry, I can answer that.

A self storage operation is classified as such if the owner of the their property is the one taking them in and out of storage.  The storage facility does not get involved with the receiving or shipping of Property of Others.

A Warehouse receiving and shipping assumes Care, Custody and Control of the product without the owner being involved.  A Warehouse covers this Liability with the purchase of Warehouse Legal Liability coverage.

As you can see, there is much more exposure with a Warehouse operation than a self storage facility.