13 INVESTIGATES: Storage Unit Insurance - Alabamas13.com WVTM-TV Birmingham, AL

13 INVESTIGATES: Storage Unit Insurance

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BIRMINGHAM, AL - Many of us, at least at times, have too much stuff. That has the self-storage industry booming. The count is mind boggling: more than 52,000 facilities across the U.S. And get this, there are more than 2.3 billion square feet of storage space.

More and more, customers who rent storage units are running into a requirement for insurance or products that resemble insurance.

Alabama’s 13 took a look at the fine print. Like it or not, you've got to have insurance for your storage unit. Basically, that's what a letter from one self-storage operator warned some of its customers. It explained, if you rent from the company and don't have protection, they'll add it to your bill.

But, how can storage facilities peddle protection? After all, they don't have licenses to sell insurance.

“The mission of the department is to serve the public of Alabama by regulating and providing some guidance to the insurance industry in the state," Mike Fowler told us. Fowler is Governmental Affairs Manager for the Alabama Department of Insurance. Alabama's 13 alerted the state insurance department about the letter. Fowler told us it was news to them. “It was an interesting letter and the department's looking into it.” Fowler said. “That's about all I can tell you at the moment. But, you know, often times, when consumers bring matters to the department's attention, the department will look into it. And that's what we're doing in this case."

In this case, the letter is from iStorage headquartered in Winter Garden, Florida. According to its website, iStorage has 10 storage facilities in Alabama. We called iStorage to get answers. We specifically asked to speak with someone in a position of authority. The call went to someone who would identify himself only as “Chris.” His response, “We're not going to do an interview about this.” Then Chris hung up. So, it's back to the letter.

iStorage does not call its required coverage “insurance." Instead, it labels it a "Property Protection Guarantee and Warranty." That’s something the company's own letter says iStorage "created."

"It just appears they are skirting an insurance issue," Bill Sager told us. Sager is executive vice president of the Alabama Association of Independent Insurance Agents. Sager sizes up iStorage's so-called warranty protection as pricey. The cost can run up to $252 a year for up to a $5,000 payout per claim.

"You can buy $40,000 or $50,000 worth of contents insurance that's literally insurance and not $5,000 worth of a warranty with many stipulations," Sager explained.

In many cases, if you have a homeowner's or renter's policy, then your property in storage is already covered. Sager says that means you don't need to pay one cent more to anybody. "In most policies, you're going to have coverage on your contents if they're in a storage building, if they're over at a neighbor's house, wherever they are, basically in the world."

There's another issue. If this is an insurance product, in Alabama, you've got to have a state-issued license to sell it.

We pointed out to Sager that the Alabama Department of Insurance forbids anyone to sell property and casualty insurance without a license. "That is correct," Sager confirmed. “It appears to be skirting the issue. And I would certainly leave that up to the department."

"At the end of the day, we're a self-storage company,” Courtland Davis told Alabama’s 13. “We don't sell insurance." Davis is managing partner of Birmingham-based Attic Plus. His company does not require tenants to buy insurance. "If you're already covered with insurance, then you don't need double insurance from us," he told us.

Davis sees the practice of requiring insurance, or something similar, a hidden fee -- an easy way by some companies in the self-storage industry to make more money. "I don't know for each individual company,” Davis said. “But, for some people, it seems like a way to add a little extra money when people are coming in the door."

Alabama's 13 checked with other self-storage facilities to see what they require.

Metro Mini-Storage does not require renters to buy insurance. But, Metro told us its renters must sign a waiver if they don’t insure.

Public Storage won’t make you buy the insurance it offers. But, like many competitors, Public Storage requires its customers who opt out to prove their items in storage are already covered.

Then there's iStore, a company with no connection to iStorage. iStore chief operating officer David Dixon tells Alabama's 13 his company won't force anybody to buy a policy before renting a storage unit. But, Dixon says after his company’s experience with fires and tornados, iStore strongly suggests it.

iStore uses a third-party insurance agency called Bader company. That agency is based in Indiana.

We checked. Bader has a valid license issued by the Alabama Department of Insurance.

Back at the Alabama Association of Independent Insurance Agents, Bill Sager says, “It's clear profit." We asked Sager if the policies some self-storage places sell are better for them than their customers. "Looking at it at face value,” Sager says, “I'd say yes sir it is."

Remember, some self-storage companies are trying to make you insure your own stuff. Insurance is supposed to financially protect your property. So, how can a storage facility have a legal stake in what belongs to you?

We asked Sager, "If you want to roll the dice and lose everything in your storage unit, what's it to them?" His reply: "What's it to them? As long as you paid the rent for your storage unit."

Courtland Davis agrees. "It's the customer's at the end of the day,” he told us. “If the customer doesn't want to get insurance, it's their deal."

Required insurance for self-storage units: it has a lot of folks storing up questions and concerns. Even the Alabama Department of Insurance is working to unpack the issue to see if regulators need to take a stand. “Give us time and something may come of it,” Mark Fowler summed up. “If it does, we'll let you know."
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