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!
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.
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!
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.
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.
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.
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!
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