Start the New Year Right by Reviewing Insurance and Risk Management Plans
The first quarter of the year is an ideal time to review the elements of a self-storage operation’s risk management strategy, prepare for future activities, and plan ahead for the unexpected. Here are some important items to review and revise as needed.
Last year’s devastating wildfires in the western states coupled with severe weather events around the country serve as sobering reminders of the importance of creating a detailed plan for emergencies and catastrophic events and providing ongoing employee training to reinforce the plan.
Expansion and Development
Many operators in the self-storage industry have plans to acquire additional properties, develop new properties, or upgrade existing properties. While the business owner may have set aside time to budget for these tasks, they may not have considered the risk management aspects. Now is the time to discuss strategic development plans with your self-storage clients. As an agent, you can help identify potential new exposures and recommend insurance coverages to address them. In addition to legal counsel, self-storage operators should consult their insurance agents prior to implementing changes to the facility’s rental contract.
It is a good idea to schedule an in-depth coverage review with your self-storage clients at least once per year. This review does not need to correspond with the policy expiration date. The first quarter of the year is an excellent time to address existing insurance coverages and limits and consider changes that may be appropriate as the self-storage operation accomplishes planned expansion, development, and upgrade activities. Upgrades to structures and security enhancements can be factors that may lower the insurance premium, so be sure to communicate with your self-storage clients about their plans to make upgrades and enhancements.
When meeting with your clients, there are two coverages that you may wish to discuss. Cyber insurance is becoming a critical coverage for businesses of every size as a protection against the mounting costs of recovering from a data breach, cyber “ransom” demand, or denial of service attack. In addition, equipment breakdown insurance (particularly programs that cover older equipment that may experience mechanical breakdown) is becoming an important coverage for self-storage operations. Both of these programs offer significant value in terms of premium cost and the level of protection provided as compared to the potential negative impact on the operation’s bottom line in the event of a loss.
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