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  • Selling tenant insurance worth it?

    We get 40% of insurance revenue. Question is, are there tenants who do the total economic cost thing in their head and include the insurance into their overall rental cost?

    In other words, when it comes time to increasing rent, would the cost of insurance be an impediment?

    Curious to what people think here.

    Our building is basically a concrete bunker, indoors units only, very secure so most people don't think of getting insurance as far as I've seen.

  • #2
    Most of my tenants, current or want to be, assume that the storage (property) insurance covers THEIR belongings!
    It is not until you educate that person, that their belongings are NOT covered, do they begin to understand why we require all of our tenants to have some form of coverage.
    Whether it is through the outside company we are partnered with OR their own homeowners/renters policy!

    I do not think that the insurance factors in when a tenant is thinking about insurance.
    Sure, they mention it when they get a rent raise, but it is a requirement so they understand.

    Don't put off until tomorrow, what you can do today.

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    • #3
      I looked into it, but with the main risk (small as it is) being flooding from falling rain and pests at our location, it's pretty much not worth it for the tenants. Yes, it would be a profit stream, but I just can't sell them a policy when I know they can get renter's insurance for practically the same amount which will have better coverage and not be limited to just the storage unit. I tell people to check with their homeowner's or renter's insurance. And if they don't have either one, to go get renter's insurance. I've made it into a selling point actually, as we are the "independant, mom-and-pop" type store and it helps build credibility.

      As for rent increase, if you don't mention insurance in the letter and just state the rent increase ( your rent is currently x, but is increasing to y), I don't think people will necessarily connect the dots right away. It'd also depends on how far below street rates they are, how big their increase is, when was the last time they got a raise, and if they actually have insurance. If the majority of your facility doesn't have insurance, I really wouldn't make it too much of a priority.

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      • #4
        We have drive up units, but you never know what's going to happen. The way I put it is "we strongly recommend you carry insurance on the units, in the event something unexpected would happen. Would $2000 be enough coverage?". Sometimes it's worth me saying two sentences to get a small commission.

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        • #5
          We don't sell the insurance. I tell them their belongings are likely covered by their home owners/renters/business insurance but need to contact their agent to see if insurance premium is different and what is covered. I do give the tenant an insurance pamphlet and I tear out the section that states what the tenant is responsible for about their items, and they initial that I made them aware of the insurance available to them and they have to call to get it. I don't want any insurance money stream that the tenant can come back at me about for insurance of their items. IT IS UP TO THEM!

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          • #6
            Our state statutes require insurance be carried by the tenant. They can provide proof of coverage (homeowner's or renter's) or purchase the offered insurance - we are not insurance agents, but with some training and guidelines, you generally can offer the insurance (each state would treat it differently). At one point it was 50% and now it is between 70%/80%. It is most important that you instruct the customer/tenant to read over the policy, its cost and especially, the policy exclusions.

            It is important that the tenant have insurance on the unit(s), since every facility I have seen a lease for, specifically states that tenant belongings are not covered. If it is important enough to store, it should probably be insured. In the past, I have lowered the rent to cover the cost or split the cost with a customer. Most customers expect it now and it is not an issue. The hang-up or problem seems to be managers that do not know how to offer the insurance to the tenant. They do not want to sell insurance, which creates a mental block in their heads. Treat it just like renting a unit, the customer has a need - storage, rent the unit to help them. The unit requires insurance - they can not provide proof of coverage, help the customer by offering the insurance to fill that need.

            Also, it is a lot easier conversation with a tenant about damage to the items in a unit when you can let them know they have insurance on the unit, this is from experience.

            It is also important to know what you are offering the tenant - insurance or a protection plan, since these are vastly different.

            We are not a huge company, but forecasts for this year - insurance revenue will be $120K+, $35/40K from my facility alone.

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            • #7
              It is not a state statute requirement here, amazed since Oregon is so freakin' liberal, so it is up to the tenant to provide their own insurance. I make them initial the insurance info that I covered it with them and also sign the disclaimer line of the tear out from the insurance pamphlet. If they have a problem it is on the ADULT that signed the lease.

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              • #8
                Yes it's worth it. We have a 78% penetration rate voluntarily, and make about $860 a month. We also do rate changes every 10 months for 9.5%, so it has no impact on rental rate changes.
                Chasing Perfection to catch Excellence

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                • #9
                  Originally posted by MyStorageOps View Post
                  Yes it's worth it. We have a 78% penetration rate voluntarily, and make about $860 a month. We also do rate changes every 10 months for 9.5%, so it has no impact on rental rate changes.
                  Wow thats a high rate. Your prop manager must be a good salesman.

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                  • #10
                    I currently have 1100 units rented. 52% have insurance. We're making just under $3000/month. Totally worth it!
                    MamaDuke

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                    • #11
                      Our sites require coverage. Company wide, we are 85%, we retain 85% of the plan coverage. Each sites makes about $30,000 / year in revenue. Well worth it.
                      Thanks!

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                      • #12
                        Mind if I ask what % of the insurance proceeds you get? Our current insurance provider keeps 60% and we get 40%. The lowest rate is $9/mo

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                        • #13
                          I have dozens and dozens of tenants that are here at my facility in large part because they were burglarized at other facilities or had damage to their belongings from water or something else. Exactly ZERO of them had any type of settlement from the required 'insurance' policy their other facility required them to pay for.

                          In my opinion it's a naked money grab by the 'carrier' and the facility. When the company can split the fee with you roughly 50/50, that tells me there's very little coverage there. Like many of the big insurance carriers, they're going to fight every single claim rather than pay out on the easy ones.

                          In California, you're much safer referring to the product as a Tenant Protection Plan and not insurance. Heckert v A1 Storage is still unsettled, as whomever is the insurance commissioner in CA has a lot of sway as to whether storage 'insurance' is subject to licensing laws and insurance sales requirements.

                          Considering how the tenants I have now feel about the facilities they came from, IMO it's not worth the money to me, nor the time and energy explaining that the TPP is not insurance. I have them sign in my lease that I insure my building and facility only, insuring their contents is entirely up to them in whatever manner they see fit.
                          In no way affiliated with Storman software.

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                          • #14
                            ..I should add that the value of 'insurance' in my market is the fact that I don't require it. I make a big point of that in my sales pitch and people respond well to that. It definitely helps me obtain and retain tenants.

                            In no way affiliated with Storman software.

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                            • #15
                              Originally posted by Storman View Post
                              Exactly ZERO of them had any type of settlement from the required 'insurance' policy their other facility required them to pay for.
                              I used MiniCo at a previous property. We had many break-ins there. They paid out on every single claim. I didn't have anyone unhappy with the payment they received. (And I'm more than happy to not work there anymore!!!)
                              MamaDuke

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