Roger Flaxman, of Flaxmans, explores the insurance issues for the growing self-storage industry.
Some of our most valued treasures and prized possessions are consigned to the attic! When that is full or converted to a room, the local storage company often gets the benefit of our custom.
Whilst these units might look like Fort Knox and appear reassuringly secure they are not immune from the ravages of fire, explosion or flood, or even contamination, to name just four natural perils.
The prospect of successfully claiming from the storage company for a loss might on the face of it seem the logical thing to do but in fact it can be fraught with problems and disappointments because of the closely-typed ‘get out’ clauses in the customer’s terms of business.
Whilst insurance is often offered as an extra service by the storage company the terms of the insurance have restrictions on the scope of cover and most customers are not aware of them until they make a claim.
In addition, the customer may also be covered for the loss under the contents section of their home-owners policy. If so, theoretically, the two insurers may try to apportion the loss between them (because a policyholder lawfully cannot claim on both for the same loss); and this can result in obfuscation, delay and disappointment with the outcome for the customer.
For peace of mind it is important to make sure that you cover a client’s “in storage” goods and chattels under a homeowners policy or business contents insurance for the full value of replacing them.
Here are some reasons why:
- It is not permitted to store certain goods in your unit and if these are present then your storage insurance could be invalidated
- By a similar token, you will never know what is stored in the units next to you and if it is an illegal or hazardous substance it may put your own property at risk but you cannot influence what is stored in neighbouring units
- In the event of a dispute, you may not have any legal entitlement to claim directly against the insurer of your storage unit
- You will not be aware of the terms of the insurance contract between the insurer and the storage company and this may preclude you from having any access to them in the event of a complaint
In summary there is no guarantee that the security of the unit and/or the insurance sold with the space will entirely protect a property or its inherent value to the customer.
If stored goods are valuable then it is prudent to engage an insurance broker for home or business insurance and let them advise on appropriate insurance protection.
Resolution of insurance disputes is better achieved via specialist insurance claim advocates than by going to law.
There are usually good chances of success in negotiating a settlement by commercial means and it avoids the stress, cost and uncertainty of litigation.
Roger Flaxman is chairman of insurance advocates Flaxmans
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