In the early morning hours of April 29, 2018, a four-alarm fire tore through a self-storage unit facility in Laguna Hills, California. The fire burned for over four hours and took 100 firefighters to extinguish. Even though the fire was put out, the damage was done. The roof and part of a wall partially collapsed, and more than 150 self-storage units were destroyed.
We can only imagine what was lost in the fire. While the storage facility’s insurance provides coverage to repair the roof, wall, and units themselves, neither the company or their insurance is obligated to replace the personal items lost in the fire.
This leads us to the question we’re about to answer. Do you need insurance for self storage unit protection?
Do You Need Insurance for Self Storage Unit Coverage?
For some people, the answer to this question is a little more complex than it will be for others. Most people who have homeowners insurance (that includes coverage for personal items) have some degree of coverage for items kept in storage units.
The limit on coverage for self storage varies, typically for an amount up to ten percent of the total personal items coverage for the home. The personal items coverage for a home is 40 to 75 percent of the insured value of the building.
So, if your home is insured for $500,000, your personal items coverage could be as high as $375,000 or as low as $200,000. This determines the coverage for your storage unit is between $20,000 and $37,500, which could be more than enough for some people.
But, there are some instances, when coverage provided by homeowners insurance is simply not enough to cover the items being stored or in light of other extenuating circumstances. In these cases, it is best to go above and beyond and seek specific insurance for your self storage unit.
Generally speaking, you’ll have a few options available to you.
- Add-on policy for homeowners or renters insurance policy.
- Separate personal policy purchase for those who do not have renters insurance or homeowners insurance.
- Purchasing an insurance policy through the self storage company.
It is worth mentioning that some self storage companies require proof of insurance as part of the rental agreement. If you don’t have your own insurance policy, they’re happy to sell you one or give you an opportunity to purchase from a private insurer. Remember though, when you go through an independent insurance agent, you get the benefit of bundling discounts.
What Is a Storage Unit Really Worth?
Storage units can contain a wide range of items. According to Simply Self Storage, the top 10 most stored items include:
- Files and Documents
- Valuable, rare, or collectors’ items (including antiques and expensive art)
- Seasonal items
- Photographs and magazines
If you’ve watched the storage unit auction shows on television, you know the value of a unit can be next to nothing or in the millions.
Let’s look at three hypothetical storage units to see if the owners should consider adding more coverage (or getting coverage at all) for their items.
Mark is a car enthusiast. He has several collectible cars at home, but his wife won’t let him store anymore in their oversized garage. So, he rents a storage unit for one of his cars, a 1975 Chevrolet Camaro, and decides to store a few other items to clear up space at home. He dedicates one side of the storage unit to the car but fills the other with boxes of Christmas decorations, family photographs, and old knick knacks.
Mark’s personal property coverage does cover items in a storage unit, up to $25,000.
His Camaro was appraised last year at $20,000. In Mark’s case, it’s up to him to decide if he should purchase additional insurance. His car is covered, which is the most important. His family photographs were scanned and digitally stored years ago and the knick knacks aren’t rare or collectible. Most of the Christmas décor is outdated. Mark decides that his current insurance is enough.
Sarah is a self-diagnosed hoarder. But she likes to keep her life organized. Rather than get rid of items, she stores them off-site. The problem is that Sarah’s been adding to her storage unit for years and she’s not sure what’s all in it. She knows there are some old DVD’s, a bunch of files containing old tax information, and plenty of books. There are a few bags of clothes and a couple of vintage dining room chairs she’s going to update one day. The remaining bags and boxes are a grab bag.
But Sarah knows there are a few items in the back that she’ll need to dig out one day. Her aunt left her several antique pieces of art. She’s never had them appraised but her family members tell her that their combined worth is a six-figure number. Sarah’s a homeowner but her home is on the smaller side, which means her personal property coverage is, too. At only $15,000, she knows it’s nowhere near enough to cover the antique artwork. Sarah decides to speak with her insurance broker about adding additional coverage.
Chad is living his best life. He’s a freelance web designer with the means to travel while he works. He just got back from a month exploring the Rocky Mountains. He’s sleeping on a friend’s couch for a week before heading down to Florida for a couple months. Over the years, he’s collected quite a bit. His parents gave him their old living room set (in hopes it would encourage him to settle down) and he’s picked up a few other miscellaneous pieces of furniture during his travels. He also enjoys collecting small electronics and has several boxes in his storage unit.
Chad doesn’t have a permanent residence, so he doesn’t have homeowners insurance or renters insurance. Chad has assumed the storage facility’s insurance was protecting his items, but his buddy mentions that the company’s policy only covers the structure. Chad immediately calls his insurance broker and asks him to develop a policy that will keep his items safe until he’s ready to set down roots.
What are the Risks Associated with Self Storage?
There are many different risks people face when leaving items in self storage units. These units are not built with the same standards of traditional homes, and you never know who your neighbors are in these facilities.
Maybe you now realize your storage unit is worth more than you thought. But what could go wrong? Some of the more common risks include:
- Fire, Smoke, or Water Damage (from fires)
- Wind Damage (from tornadoes, hurricanes, or straight line winds)
While some people mistakenly believe that the insurance for the self storage company will cover their damaged or destroyed property, the truth is that their policies are designed to protect the interests of the business alone and do not cover the contents of customer units.
When is it Most Necessary to Have Self Storage Unit Insurance?
While it’s a good idea for all self storage unit owners to consider purchasing insurance for their units, the following situations make it an absolute necessity.
- When storing valuable items. Furs, antique furniture, expensive rugs, and more can easily exceed the value of the homeowner’s policy limits making additional coverage for these items a necessity.
- If storage unit is located in a high heat or high humidity area. Even climate controlled units in these areas can become breeding grounds for things like mold, mildew, and simple heat damage. You’ll need additional insurance protection that specifically includes these types of damages.
- In the event that existing insurance coverage excludes self storage units or is inadequate to meet your needs. This simple means that you need to look elsewhere for adequate insurance coverage.
- Whenever traveling out of state or country and unable to keep a watchful eye on your storage unit and its contents. Long absences of owners make storage units attractive targets for thieves and vandals.
Don’t forget about the potential need for additional liability coverage. If something in your unit happens to be the cause of a fire or some other type of damage to surrounding units, you could be left footing the bill for the damaged items. Since most homeowner’s policies limit liability coverage for self storage to $100,000, this could be a huge problem.
While some people may be able to rely solely on their homeowners insurance policies, others find that it’s simply not up to the task of protecting their investments in storage unit items. Consult with a trusted insurance agent if you need insurance for self storage unit peace of mind.