The Self Storage Association, or SSA, reports an estimated 10 percent of Americans rent a storage unit, contributing to an industry that brings in $20 billion a year in revenue, making self storage the fastest growing commercial real estate section in the last 30 years.
With so many people storing personal property, it is important to consider storage insurance. Rental agreements with the average storage unit dictate the tenant as responsible for lost or damaged goods within the unit. A tenant would have to refer to personal insurance coverage first. A limit equal to 10 percent of the personal property within a storage unit is provided, according to the 2011 ISO HO 3. This limit of liability is not always sufficient.
Take for instance a homeowner who downsizes from a 3,500 to a 1,600 square foot home due to financial hardship. The homeowner rents a storage unit for the personal property that does not fit in the smaller home, such as furniture, art, tools, televisions, lawn equipment or appliances. The college-bound children store items in the unit as well.
If the new home has a personal property limit of $60,000 and is insured for $120,000, then the personal property coverage for the items in the storage unit is $6,000. Given the expensive items in the storage unit, this figure could be far too low for adequate insurance coverage.
In order to bridge a gap in coverage, there are 3 options. One option includes increasing the personal property insurance amount in the self storage facility endorsement (HO 06 14), which will increase the storage unit’s limit of liability coverage. Another option is to add the items in the storage unit to a personal inland marine policy, or floater, to allow for more coverage. A third option is to buy extra coverage through the storage facility. This option may be more expensive than a homeowner’s policy and require a deductible of $100 to $500. Storage facilities often charge $.50 to $2 per $100 of property.
With these options for covering potential insurance gaps, calculating the value of stored property is important to determine if and how much extra coverage is needed, taking into account the size of the deductible. Once all the factors have been contemplated, the decision for extra insurance can be made.