Self Storage Insurance Probe in Alabama

Posted on Mar 4 2014 - 7:44pm by Tony Gonzalez

House insurance. Car insurance. Life insurance. People who sell these types of insurance are required by law to have a license to sell it. A recent brouhaha is stirring in Alabama concerning self storage facilities that require tenants to buy insurance to protect their belongings that they store in the facility. Some of the people in Alabama are unhappy about this requirement.

Many self storage facilities in the United States require tenants to carry property insurance as part of their rental agreement. For some self storage companies, if tenants can show proof that they already have coverage from an existing policy, they do not have to purchase an additional policy with the storage facility. If they have a home owner’s or renter’s insurance policy, then self storage renters do not need to purchase additional insurance for their stored belongings.

However, one self storage operator warns their customers that if they rent from the company and don’t have protection, the cost of the insurance will be added to the monthly rental bill.

A self storage company based in Florida has ten facilities in Alabama. The company sends out a letter warning its customers that they must have insurance. The company pushes a property protection guarantee and warranty – which, by the way, the company created – not an insurance company. Mark Fowler, who is with the Alabama Department of Insurance, is investigating the situation with this storage company.

In Alabama, self storage operators do not have legislation that allows them limited-lines licenses to act as agents on the behalf of authorize insurance companies. So, legally, they cannot sell tenants insurance. 

The Alabama Self-Storage Association (ASSA) recently held their annual conference and trade show at the Barber Vintage Motor Sports Museum in Birmingham. The topic of required insurance was a hot issue there. Brent Fields, executive director of the ASSA indicated that they do not condone the requirement that tenants purchase a facility’s insurance. And, he sees this more of an issue with self storage companies that have a large portfolio and not the mom-and-pop facilities.

Fields indicated that the ASSA is working on the problem surrounding requiring tenants to purchase insurance. He is considering offering legislation in the 2015 session that would allow owner-operators to get a limited license to sell the insurance. That would make it legal for them to do so.

Sources Used:

“13 Investigates: Storage Unit Insurance Follow Up.” Alabama’s 13 WVTM-TV; 26 February 2014.

“13 Investigates: Storage Unit Insurance.” Alabama’s 13 WVTM-TV; 4 February 2014.