The Producer's Role in Educating New Self-Storage Owners
The self-storage industry has proven itself to be resilient to the vagaries of consumer trends, economic recession, and even pandemic, all while offering a wealth of opportunities for agents and brokers to grow a book of business. An increasing number of self-storage owners and prospective owners are first-timers when it comes to this real estate sector, which means that you as an insurance professional have an opportunity to help educate them about the unique exposures inherent to these risks.
The booming interest in self-storage is directly related to a few characteristics of the industry that make it attractive as a business opportunity as well as a prime opportunity for producers.
1. Consumer Demand is Growing
In the over four decades of the industry's history, self-storage has proven to be a service trusted by consumers for personal and business use.
2. Self-Storage is Virtually Recession-Proof
The demand for self-storage space increases year after year, with the recent exception of the early days of the recession in 2007 and 2008. Even then, the decrease in customer demand was short-lived.
3. Self-Storage is an Essential Business
When the pandemic required many businesses to cease or limit operations, the vast majority of states designated self-storage as an essential business, meaning that facilities were permitted to continue operations in compliance with required safety guidelines.
For business owners new to the self-storage industry, it is important for them to understand the unique exposures and risks as well as applicable state laws that govern the industry. Here are some topics to discuss with your insurance clients who are new to self-storage business ownership. Educating them now may help their businesses become better risks in the eyes of an underwriter.
• The importance of the lease agreement (or rental contract).
• Applicable state laws that govern the self-storage industry.
• Facility location, construction materials, and roofing.
• Security systems such as fencing, entry gates, individual door locks, lighting, cameras and video monitoring.
• Inspection and maintenance as a risk management tool to include landscaping, pavement and walkways, steps and ramps, roll-up doors, lighting and security equipment, fire-prevention systems, security gates, and roofing.
• Unique liability exposures such as lien sales, tenant delinquency notification, and storage of hazardous and flammable materials.
• Cyber security and risk management practices, including insurance, to reduce the risk of data breach and other cybercrime.
• Dangerous tenant behavior such as smoking on the property, using flammable materials on the premises, prohibited use of electrical devices, and living in rented units.
• The concept of care, custody, and control as well as the benefits of offering tenant insurance.
• The benefits of joining a state self-storage association.
As a producer, you have an opportunity to partner with self-storage business owners. For more information about exploring opportunities in the self-storage industry in your state, contact Chris Nelson at email@example.com or 800-528-1056, ext. 3548.
Construction Costs Continue to Rise
The record-breaking wildfire season currently wreaking havoc across the western states is a sobering reminder for insurance professionals to discuss property valuation with clients. In addition to the catastrophic damage done by wildfires, hurricanes, hail, and wind, property owners now face rapidly rising costs for construction materials and labor. The cost of reconstruction has increased dramatically in the past year, due in large part to pandemic-related materials shortages, and both property owners and producers need to be aware of the possible resulting effects on out-of-pocket costs.
A recent report by CoreLogic, Quarterly Construction Highlights Q2 2021, identifies year-over-year trends for construction materials and labor. The report shows increases in all categories of construction materials with highest increase in lumber costs at 42 percent in the past year and drywall with the lowest increase at less than one percent.
The states with the highest increases in cost growth for materials overall were Rhode Island, Iowa, and Maine with Rhode Island, Washington, D.C., and Iowa leading in lumber cost growth. The lowest increases in cost growth for materials overall were found in North Dakota, South Dakota, and Vermont with the lowest lumber cost increases in Hawaii, New Hampshire, and South Dakota. In terms of labor costs, North Dakota, South Dakota, and Idaho had the highest increases in the past year with Arkansas, Washington D.C., and Ohio recording the lowest cost increases.
With reconstruction costs on the rise and the increasing frequency and severity of catastrophic fire- and weather-related insured property losses, it is necessary to evaluate premium costs in relation to potential out-of-pocket exposure in the event of a large loss, major liability claim, or catastrophic event. Be sure to address property valuation at your next insurance review with each of your clients who are commercial property owners. If you have questions about property valuation or would like more information about MiniCo's portfolio of specialty insurance products, contact an underwriter at 800-528-1056 or firstname.lastname@example.org.
Cyber Insurance for Self-Storage Risks
Self-storage facilities, along with other small and medium-sized businesses, are increasingly vulnerable to the risk of cyberattacks and data breaches. While many business owners underestimate the threat, the reality is that cybercrime is one of the fastest-growing risks to businesses of any size. Business owners would be wise to develop a risk management plan that includes cyber insurance.
If the policies for your self-storage clients do not currently include coverage for cybercrime, it is strongly advised that it be added. MiniCo's specialty BOP for self-storage risks includes optional cyber and data compromise coverage with a limit of up to $50,000. The coverage provides a variety of services to help businesses respond to data theft including electronic theft (hacking), laptop theft, theft of hard copy files, employee theft of corporate data, accidental publishing, fraud, and procedural efforts. Identity recovery coverage is also included and provides case management service and expense reimbursement coverage if certain requirements are met.
Many businesses, however, need additional coverage to address this exposure. Our monoline cyber insurance product for small and medium-sized businesses addresses a range of exposures including breach response, business interruption loss, cyber extortion loss, data recovery costs, data and network liability, and eCrime. Preferred rating is available for self-storage risks.
|Preferred Rating for Self-Storage Facilities
• Minimum premiums starting at $250 for $250,000 limit
• $350 for $500,000 limit
• Available in all states except AK, FL, LA, MN, NM, NY, VT, and WY
• A.M. Best "A" rated carrier
For more information about cyber insurance or to get a quote, contact Michael Attanasio at 518-782-3300 or email@example.com. No supporting MiniCo accounts are required for the monoline product.
On the Road with MiniCo:
Representatives from MiniCo Insurance Agency will be traveling to a number of insurance and self-storage industry events in the coming months. If your plans include attending any of these shows, we hope you will stop by the MiniCo booth.
Applied Net 2021 (virtual)
August 23-26, 2021
SSA Conference & Trade Show
Las Vegas, Nevada
IIAB of Arizona Convention
Washington Joint Conference
Texas Self Storage Association Conference
San Antonio, Texas
CSSA Owners Conference
IIAB Sacramento Big I Day
Big I Oregon InsurCon
San Diego I-Day
San Diego, California
|Report a Claim to MiniCo
After Hours: 855-861-0876
Fraud Hotline: 855-875-0775
To report claims for other MiniCo products, visit www.minico.com.