Between the pandemic, bouts of civil unrest, a blizzard in Texas and other unexpected events—the last few years shows that anything can happen.
So why are you still letting customers rent units without proper tenant insurance coverage?
Tenant insurance provides compensation to customers in the event of a catastrophic loss such as theft or fire. Many tenants may not realize that the storage operator is not financially liable for items in storage units if a loss event takes place.
If a tenant doesn’t have insurance, more often than not, they may try to blame you and seek compensation. The hassle and the potential damage to your reputation from such a response can disrupt your day-to-day operations. The more uninsured tenants you have, the greater risk this becomes.
To avoid this risk, it’s best for storage operators to verify insurance coverage is in place for as many of their tenants as possible. This is most easily achieved by requiring tenants to carry insurance and making tenant insurance available at the point-of-sale.
So what are the best practices for storage operators looking to make sure all of their tenants are protected?
To find out, we spoke with Storable’s Chuck Stringham, national client development specialist at Storsmart Insurance. He has more than 10 years of experience in the industry, and specializes in moving managers to successfully grow their tenant insurance program.
Stringham is also a facility owner with a 174-unit store in Lake City, FL.
What benefits do storage operators gain by having more of their tenants obtain insurance coverage?
Chuck Stringham: For me, it’s about being able to help my customers when things go wrong. I’ve had theft, water leaks and vermin issues in the past and being able to let a tenant know they can get help is huge.
Reputation is big in small towns where my facility is and I feel tenant insurance is “reputation protection.”
What sort of risks do operators face when tenants aren’t covered by insurance?
The largest risk, in my opinion, is the fact that customers rent storage with very little understanding of what they are responsible for. Most do not read the lease, which explains they are fully responsible for loss. Having a customer uninsured is most likely putting me in a position where that customer will feel they are entitled to compensation, which I will not provide.
This then increases my risk of them going on social media and damaging my reputation, which in turn can affect my rentals. Legal risk is certainly there, however, most tenants would not go that far. I’d rather have the tenant have something for coverage than nothing regardless if they feel they don’t need it. Tenants are not to rent unless they have proof of insurance at my facility.
Do all customers need a separate tenant insurance policy? Aren’t most already protected by home or renters’ policies?
Not all customers have coverage, which is the big issue with “other insurance.” It’s assumed there is protection of loss, however it is only discovered when there is a loss event where the customer finds their coverage was for items at their dwelling and not a facility off-site.
The other issue is that most, if not all, policies have deductibles. This deductible is typically more than their items are worth, which in turn provides them nothing for coverage and puts me back at risk with that customer.
The Storable policy I provide has no deductible, so it certainly provides the best option for compensation versus any homeowners or renters insurance.
How does one motivate staff to get tenants to opt-in at the point-of-sale?
There are many parts to this answer, but the main one is confidence. When a manager understands the importance of insurance either from past bad experiences from loss or with training Storable provides, the more they believe and trust in the product. It’s very common they then see it’s not about money and it’s more about the customer relationship.
How should self-storage managers explain the need for tenant insurance to their customers?
The provided training gives them this confidence but also provides tools in how to handle the small conversation for enrollment. Less is more in this case. Managers tend to feel they need to talk a customer into insurance. It’s more about setting the expectation that insurance is part of the rental and all customers take it when they rent.
At any point that the words “suggest” or “offer” are used, it’s going to negatively affect their enrollment percentage. The best phrasing is, “Our lease requires our customers to have insurance, will the $9 policy be enough for you?”
Protect your tenants, protect your business
By making sure all of your tenants have adequate insurance for their stored possessions, you are also protecting your business from complaints and lawsuits if a large number of tenants suffer a loss at once. Learn more about Storable’s innovative insurance offerings designed to keep operators and their customers protected from unexpected events.
Ready to read more about using technology to reach maximum tenant coverage at your facility? Check out Part 2 of our interview with Chuck Stringham below:
https://www.storable.com/resources/learn/what-is-auto-protect/
