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Do we need a fresh look at selling self storage insurance?

Mar 20, 2019
David Jordan reflects on the recent fire at a self store in Croydon, UK and questions whether it’s time for operators to reconsider how they offer insurance to their customers.

Do we need a fresh look at selling self storage insurance?

The devastating fire that destroyed the Shurgard* self store in Croydon on New Year’s Eve has brought into sharp focus the need for self store operators to make it clear to customers who is responsible for the safety of their possessions.

During a BBC programme, broadcast only a week after the fire, two customers who lost the contents of their storage units accused Shurgard of misleading them as to the safety of their items.  One customer said she had lost the entire contents of her house, including sentimental items such as letters and photographs, and had only been offered £2,000 in compensation, which was in fact the amount of the insurance cover she had taken out with Shurgard.  A businessman who lost his entire stock worth £180,000 said that, so far, he had received nothing.

Duncan Bell, Vice-President of Operations at Shurgard, who also appeared on the programme said he "would like to apologise" and that his company would do all it could to help. His apology was rejected by both parties.

While we can all sympathise with the unfortunate people who lost their possessions in the fire, quite what Mr Bell was apologising for – assuming the building met the required safety standards – is not clear. Surely, it’s the responsibility of the customer to make sure their goods are adequately insured, not the storage company’s. After all, you wouldn’t insure the contents of your house for £2,000 and expect to be paid the full value if they all went up in smoke, so why should a self store be different? Likewise, the businessman who lost his stock should have been covered by his own business insurance.  Did he really believe he was covered by the storage company?

Despite two high-profile cases in London during recent years, fires in self storage facilities throughout the world are very rare and thanks to the sophisticated security and surveillance equipment they use, theft is almost non-existent. Goods are far safer in storage than in the average house. However, when things do go wrong it’s big news.  Losses can be enormous with hundreds of people affected, as well as possible damage to the reputation of the storage company involved.

So how do self storage companies make sure their customers understand who is responsible for what, and they are adequately insured?

I asked Rennie Schafer, CEO of the Self Storage Association UK to comment. “We advise all our members to make sure customers are aware that they are responsible for their goods while in storage. It’s in everybody’s interest that goods are properly insured and many companies insist on a basic level of cover before accepting goods into their store. Ultimately though it is the customer’s responsibility to insure their goods to their true and correct value.  Sometimes customers choose just to take the minimum level of cover, even when they know their goods are worth a lot more than that”

“The issue is further complicated by the fact that self storage is an increasingly competitive industry and operators often offer up-front discounts to entice customers to use their service.  This means a customer may be paying a cheaper rate for the first period of their storage, which can make the insurance cost look comparably steep,” said Rennie.

“One of the difficulties with self storage is unlike removers’ storage, the items stored can change at any time according to the customer’s needs.  The customer can add and remove goods from their unit as often as they want, so unless the level of cover is either high enough to begin with or regularly adjusted it may not be adequate in the event of a claim. The situation is far from straightforward.”

We called our local (Milton Keynes) branch of Big Yellow and asked them to quote for a 100sqft unit to store household effects and were given a price which included insurance, even though we had not requested it and only gave a vague estimate of the content’s value of £5,000. The insurance element worked out at £24 per month (£280/year), which we thought was too expensive. The salesperson said it was standard practice throughout the self store industry that goods must be insured for their full replacement value while in storage. When pressed, the salesperson said that we could arrange our own cover, but that proof of insurance would be required before the items were accepted into their store. We had an almost identical conversation with a branch of Safestore in Bedford when we asked them to quote for the same consignment.  They quoted £60 per month for £10,000 worth of cover. Ouch!

When we made enquiries at some smaller independent operators the situation was less clear-cut.  All recommended taking out insurance, but did not necessarily provide it, or insist it was in place before accepting the goods.

When it comes to business storage it is unlikely that the insurance offered by the self storage companies will be adequate to cover high levels of stock and it is the responsibility of business owners to make sure their policy covers their goods while in storage.

Insurance is something we all hope we will never need and the risk of losing our possessions in a self store fire is extremely small. Nevertheless, the fire at Shurgard is a timely reminder of what can happen when things go wrong. Maybe now is the time for the industry to look carefully at how insurance is sold and what can be done to make sure those using self storage are aware of their responsibilities?

*We asked Shurgard to contribute to this article, but no one was available for comment. However, The Mover has learned that despite the remarks made by customers and some reports in the press, at the time of writing (30 January) no legal action has been taken against Shurgard.  It has also been confirmed that the store was recently audited and at that time met all building and fire code requirements.  There is still no official report as to the cause of the fire. The insurers have already made payments to many customers that have lodged their claims.

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