RISK MANAGEMENT FOR SELF-STORAGE OWNERS 

Loss control is the process by which business owners protect their investments from loss.  To have a successful risk management self-storage owners need to address the top five causes of loss. 

1. WATER DAMAGE:  This damage may be caused by a leaking pipe or a flash flood.   The primary threat to the self storage units is weather related damage.  Risk management for this type of loss requires the owner to be aware of your area’s storm history, staying informed about weather predictions, and taking action to insure that the facility is as weather resistant as possible.  The owner needs to address the subject of property loss in the rental agreement, using wording that clearly states that the self-storage facility does not insure tenant’s stored property for loss.  The owner may guide customers to a local insurance agency to provide coverage for items in storage.

2. LEIN SALES:  Sale of a customer’s belongings for delinquency usually does not compensate the owner for the loss of earnings.  Many self-storage owners go out of their way to resolve delinquent payments prior to the sale of the property.  It is necessary to get as much information about a customer as possible, including telephone numbers and other persons to contact in case of emergency.  The owner needs to familiarize himself with the state laws regarding lien sale procedures.  Follow all procedures regarding notification of pending sale.  The procedure to be followed in the event of delinquency needs to be addressed completely in the rental agreement.

3. CRIME:  Self-storage owners need to be on the alert for a wide variety of criminal activities including robbery, burglary, illegal drug manufacturing, concealing stolen goods, storage of hazardous materials, and vandalism.  All employees and managers need to be trained regarding emergency procedures following a crime.  Emergency telephone numbers should be posted for ready access.  Daily inspections of the property for possible tampering or loss need to be done.  If the area is fenced, all fencing should be inspected for damage.  The area should be well lighted and free from debris.

4. PERSONAL INJURY:  Injury to a customer or visitor to the facility is a potential risk to all businesses not only the self-storage facility.  Risk management for this type of claim involves a rigorous maintenance program of the facility.  Regular inspections should include the buildings, roll up doors, and paved areas.  Potential areas of concern are sharp areas around doors, improper operation of doors, and partially removed ice or snow.  In the event of an injury, an incident report should be completed to document the date and time of the injury, as well as any additional facts about the injury.  A picture of the location where the injury took place should be attached to the report.

5. FIRE:  While fires at self-storage facilities are infrequent, when they do occur, they can be extensive.  The volume of goods stored, as well as the possible storage of combustible material creates an unusual hazard.   The owner needs to adopt guidelines to include:

1. The rental agreement should prohibit storage of flammable, combustible, corrosive, toxic, unstable, explosive, or poisonous materials
2. The agreement should prohibit activities of a hazardous nature, such as welding or woodworking.
3. Hire a qualified contractor to inspect and maintain the property.
4. Mark your property clearly so that police and fire departments can locate the area in the minimum amount of time.
5. Maintain fire extinguishers in good working order, train all employees in the proper use of the equipment.