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Key Agent Newsletter
Fall 2018

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IN THIS ISSUE:

. Tenant Insurance Best Practices
. Make a Plan for Ice and Snow Removal
. Reduce Risk by Focusing on Care, Custody, and Control
   
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Reduce Risk by Focusing on Care, Custody, and Control

HailAs the self-storage industry continues to evolve and add features to attract and retain customers, it is critical that the industry focus on care, custody, and control to mitigate the inherent risks associated with operating self-storage facilities.

Unlike a warehouse, self-storage units are typically secured by a tenant’s own lock and key and thus are not accessible to facility operators. Self-storage statutes specifically provide that self-storage facilities are not warehouses and that operators of self-storage facilities do not maintain the ability to lock and unlock a tenant’s storage space. This helps avoid creating a bailment situation with increased risk of potential liability. Bailment occurs when a person deposits personal property with another under an agreement of a contract for a specific purpose.

By eliminating an operator’s access to a tenant’s storage space, the operator does not maintain care, custody, or control over the tenant’s possessions thus limiting the operator’s liability. Once the storage facility takes possession of a tenant’s property, the legal relationship changes, the duty of care increases, and the facility may become legally responsible for the safety of the tenant’s property within. The most common example is when an operator accepts packages or deliveries for their tenants, or where the operator agrees to hold or keep a key to a tenant’s storage space. In these situations, the operator of the self-storage facility arguably creates a bailment over everything stored in the tenant’s unit at all times.

An easy, effective way to avoid creating a bailee-bailor relationship is to insert language in the lease agreement confirming that the self-storage facility is not a bailee of a tenant’s property and does not take care, custody, and control of a tenant’s goods. Additionally, self-storage operators should include an insurance provision within the lease agreement stating that tenants are responsible for obtaining insurance to protect their stored property. There is a growing trend among facility operators to require that tenants provide evidence of insurance as a provision of renting a unit. Finally, it is critical that self-storage operators maintain strict compliance with their state’s self-storage statutes.

Your insurance agent and attorney are excellent resources to help identify operational practices that may affect your self-storage facility's care, custody, and control over tenants' stored items. They also can provide counsel regarding your commercial insurance coverage and lease wording. For more information about tenant insurance programs, download MiniCo's best practices for offering tenant insurance.

Tenant Insurance Best Practices


 

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