Several aspects of tenant insurance practices within the self storage industry saw adjustments through 2014. These changes, along with predictions of what 2015 will bring to this sector of the industry, are discussed below by Mark Marshall, Director of Risk Management at Extra Space Storage, in an interview with Storage.com.
A Summary of Tenant Insurance in 2014
Throughout the course of 2014, several states passed new legislation for owners and operators of self storage facilities who offer tenant insurance, which is now requiring them to obtain a limited lines license first.
"States with limited licensing regulations clearly outline how tenant insurance can be offered," says Marshall. "This clarity protects the self storage customer and the owner by stating how tenant insurance will be valued in that state. He explains that, in 2014, one state took away the rights for an insurance company to offer tenant insurance. "With the right regulations in place, we can reduce the chance of this important coverage going away," he adds.
Another industry discussion point frequent in 2014 was either self storage facility owners and operators should offer tenant insurance or look for an alternative, such as a protection plan. Marshall says this topic generated advertising for the separate coverage products to become derogatory and disparaging in attempt to gain a competitive advantage.
"It's not good for the self storage industry to attack each program type since it brings negative light to an important part of our industry," says Marshall. "In the end, no one wins when one operator [tries] to make a product look better by pointing out the negative aspects of a competitive product. This practice can also increase regulatory scrutiny for the industry as a whole."
Forecast of Tenant Insurance for 2015
According to Marshall, many states are looking to make efforts toward protecting customers against bad business practices in general, and this includes the self storage industry. He suggests that one of the best rules to follow as the industry works to represent itself in the proper way is to avoid negative finger pointing. "I recommend, as an industry, we support states trying to pass limited lines licensing in 2015. Working to get all states to adopt self storage limited lines licensing will better clarify protection for our customers and define owners and operators's requirements to offer coverage for items stored at a self storage location. "
Marshall suggests that helping coverage providers work together to improve customer protection will be extremely beneficial to the industry in 2015 since each coverage option works towards the same goal of providing customer protection while being financially beneficial to the self storage owner or operator. "Both approaches need to find the appropriate way to provide protection without bringing regulatory inquiry or legal action to the industry."