Over twenty states currently include a limited lines insurance program that specifically allows self storage operators to obtain an insurance license to sell tenant insurance (for loss or damage to stored goods) directly to their customers and to be entitled to receive a commission for the sale. Some of those states include California, Texas, New York, Georgia, Ohio, Florida and South Carolina, among a number of others.
As each state has approved the legislation to allow for the limited lines license, operators have lined up to submit their applications to obtain the license, sometimes even before the state’s Department of Insurance had finalized the application forms. If a state does provide a limited license for the sale of tenant insurance and an operator has elected to sell insurance, then the license is crucial to have. Certainly no operator would want to take the risk of selling without a license in a state that offers the license.
But each state’s licensing law is different. Some state’s statutes include requirements for specific language to be included in the insurance product’s brochures and some require specific training for the licensee’s employees that sell the insurance at the site location. It is important that the operator verify that it not only provides the information and disclosures required by its particular state, but that it provides the training (and verification that the training occurred) that may be required by their state law.
Further, each state’s renewal requirements are different. Some states have annual renewal requirements and others provide for longer licensing periods. It is important for self storage operators to know these renewal requirements to avoid letting their license lapse and having to refile the application for licensing approval.
In those states without limited lines licensing, insurance providers have created methodologies for tenant to purchase the insurance directly through the provider (mail in programs) as compared to “pay with rent” programs. In other states, Operators has elected to purchase master policies and then include each storage unit as an “additional insured”. All of these insurance options have been created to ultimately provide an opportunity for self storage tenants to find a way to insure the risk of loss they assume when they store their property at a self storage facility.