Extended warranties, premium memberships, collector’s editions - we're used to being pitched stuff we may not really need.
But do tenant protection plans, or rental insurance, fall under that umbrella? Should self storage operators offer expansive insurance for their tenants? Should you mandate that every tenant purchase coverage? Or does homeowners insurance cover stuff in storage units?
Let's explore exactly what homeowners insurance covers, and when a tenant might need that upgrade!
Your tenants want to know what kind of protection their belongings have. We’ll go over the different ifs and ands below so you can confidently determine what your plan, or your tenant’s plan, actually covers.
Experienced operators already know the answer to this question, but it comes up time and time again if tenants are left uninformed about what they’re buying from you.
You’re selling storage space. Nothing more, nothing less.
Security features? They’re a great add-on that will net you more renters with improved peace of mind.
But security features aren’t a guarantee, and more importantly, they’re not a legal guarantee.
To put it plainly, when a customer rents from you, they are renting storage space, not security.
This can be difficult for some renters–they want to know their items are safe, and your facility’s security can help improve the safety of their belongings. But if damage or theft occurs, they might come to you asking for you to cover their belongings.
And your best–and really, only–way of covering your tenants in the event of damage is through insurance. So when you’re considering whether or not to require insurance or offer a tenant protection plan, remember that informing your tenants about their coverage and giving them options is the best way to protect them.
Bear in mind, though, that you cannot legally require tenants to purchase your tenant protection plan. While it might be the better option, tenants may prefer to bring you proof of their homeowners or renters insurance.
But there are limitations outlined in their existing policies–limitations they may not be well-informed on. Informing them could be the difference between their items getting reasonable coverage or getting left out in the cold by their insurance plan.
Like most questions I’ve run into that involve insurance, the answer to this is “well, sometimes!” Homeowners insurance often provides some coverage for items stored in a self storage unit, but if that coverage exists, it’s usually not as robust as it would be if those items were in the tenant’s attic.
Of course, each insurance policy has its own specific language, so interested tenants should delve into their contract before assuming they will be protected.
Look for the term Personal Property Coverage.
This is the part of homeowners insurance that would replace appliances that were damaged in a fire, jewelry that was stolen, or heirlooms ruined by water damage. According to Allstate, personal property coverage usually has a limit somewhere around 50% of the amount the policy will cover for the home itself.
Almost every policy will provide coverage of this type, though there will be differences. Certain policies may exclude electronics, for example, that the tenant will need to purchase separate coverage for if they want protection. Certain types of misfortune may not be covered - power failure that damages electronics is often excluded, for example.
Before tenants start researching what their policy will cover when their stuff is at your self storage facility, they need to know how the coverage will work at home.
Personal property coverage has a set limit no matter where your stuff is when it gets damaged. However, most insurance policies have a different limit for how much they will pay when the stuff is not on the covered property.
The insurance companies have a decent idea of how safe your stuff is at your home - once you leave the property, they’re much less confident. That leads insurance companies to put much smaller limits on personal property coverage applied outside the home, which includes stuff stored in a self storage unit.
Look for the term Off-Premises Coverage.
Off-premises coverage is what the insurance company will cover for losses that happen somewhere other than the originally covered property (the tenant’s home). This is going to be far, far less than the coverage provided at the home.
Pug Pro Tip: Off-premises coverage is often only 10% of at-home coverage!
There is a way for a tenant to affect their coverage, though it isn’t cheap. Paying more to increase the amount covered will of course make that 10% account for a higher return.
Additionally, personal property coverage will probably not cover damage due to storage conditions, such as mold or mildew. If tenants are looking to store items that are particularly susceptible to mold, encourage them to seal the items away in plastic, or rent a climate-controlled self storage unit.
Renters Insurance covers self storage units as well, though with the same caveats. As with homeowners insurance, there’s no guarantee that any specific policy will offer this coverage, and tenants should check with their insurance agent before relying on their renters insurance to protect their stored items.
In informing your tenants of their options–and their limitations–they may voice concern over their insurance company’s protection. And in the spirit of helping your tenant get the coverage they feel most comfortable with, you’ll have an opportunity to explore tenant protection plans.
All of this information will help each tenant decide whether or not the additional tenant protection plan or insurance is actually beneficial.
Tenants should check to see if their off-premises coverage limit is enough to cover the items they’ll be storing at your self storage facility. If the monetary value of the items they’re storing doesn’t exceed their off-premises coverage, there’s no need for them to spend more on extra insurance.
Pug Pro Tip: The more expensive the stuff they’re storing, the more they need a tenant protection plan.
On the other hand, if they’re storing things that are worth more than the off-premises coverage limit, more protection could be worthwhile. If a tenant is storing something particularly valuable, they may need to take out an insurance policy for that specific item - the other general policies may not meet the item’s value.
In particular, expensive items like engagement rings or artwork can get excluded by insurance unless the tenant purchases a rider (think of it like an insurance add-on) to cover that specific item. This is sometimes called “scheduling an item” and will increase monthly costs to allow an expensive item to get better coverage.
Tenants may be nervous about disclosing the value of their stored items to you. That’s ok–remember that you can speak to them in terms of potential need without making assumptions. For example, letting a tenant know that if they were storing expensive items like collector’s items then they might want to consider double-checking their existing coverage or look into what your tenant protection plan offers.
RVs, boats, and other stored vehicles are even trickier, as home and renters insurance won't cover vehicles stored off the property. Comprehensive vehicle coverage might protect a stored vehicle - again, the renter will have to check with their insurance agent to see for certain what the wording in their policy means.
Because vehicles are so expensive (at least compared to other commonly stored items, such as old furniture), additional coverage is usually a good idea. As the self storage operator, you may want to protect yourself from headaches by mandating every tenant purchase enough insurance to cover their stored items, including vehicles.
Insurance is a complicated subject, and self storage insurance is full of exceptions. Different companies may have different rules about homeowners insurance and self storage facilities. As a self storage operator, you can require tenants to purchase a protection plan that will cover any damages - but this could impact your ability to lease up, depending on your tenants.
At the end of the day, you aren’t required to offer any protection or information to your tenants. But showing them that you have their best interest in mind goes a long way in fostering lasting goodwill–something they might just tell their friends about. Whether that means using tenant protection to give yourself an option in the event of damage or informing your tenants about all their options if they prefer their existing insurance policy, you can answer their questions with confidence.
And if you’re still not quite sure about all this legal jargon, reach out to the SSA for more advice. We’re no legal experts–but they are!
Regardless of the route you take, your tenants will appreciate your help in explaining what the different types of coverage are, even if you can’t answer all their questions. Information is just one more way you can create a great customer experience!
Learn more ways to improve your tenants' peace of mind:
At StoragePug, we build self storage websites that make it easy for new customers to find you and easy for them to rent from you.
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