New York State Senator Neil Breslin has introduced a bill authorizing New York state self-storage operators to offer pay-with-rent insurance plans to their tenants. The bill has been sent to the Senate’s Insurance Committee for consideration. Similar laws have so far been passed in 10 states, including California, Florida, Illinois, Texas, and Washington. Currently, according to research reported by Inside Self-Storage last March, more than 70 percent of self storage operators nationwide do not offer tenant insurance. Many of those who do offer insurance do so simply by handing tenants a brochure that refers them to an insurance company offering a mail-in tenant insurance plan.
Breslin’s bill would require that any insurance policy offered by self storage operators must:
· cover personal effects that have been placed in self storage
· disclose to potential tenants that their homeowners’ insurance, if they have any, may also cover the contents of storage units (although many homeowners’ insurance plans do not cover items that have been placed in storage, or cover those items for only a limited time or for only limited kinds of damage)
· include a provision allowing tenants to cancel their insurance at any time and receive a pro-rated refund of any premiums that have been paid based on the amount of time left in the policy
· include an agreement in writing from the insurer permitting self storage operators to collect premiums without segregating the funds that are collected this way from funds that are part of the facility’s rental income
· itemize insurance charges separately but not bill them separately
New York’s pay-with-rent insurance bill would also authorize rental vehicle companies and purveyors of wireless equipment to offer insurance.
The new pay-with-rent insurance legislation is very much like a bill that was passed by the New York state legislature last year. Last year’s bill was vetoed by New York Governor David Paterson in August. Last year’s legislation, like this year’s bill, was supported by the national Self Storage Association and by the New York Self Storage Association. However, it was opposed by the Council of Insurance Brokers of Greater New York (CIBGNY).
After CIBGNY convinced Governor Paterson to veto last year’s bill, CIBGNY legislative chair Anthony Calafiore explained that CIBGNY did not consider individuals who rent self-storage units to be well enough educated to be able to make an informed decision about whether or not to buy insurance based only on the counsel of a self storage operator. Calafiore commented, “CIB has consistently opposed efforts to expand limited licenses to sell insurance. An insurance professional needs to be properly educated….This bill…would undermine the trust developed between policyholders and their independent brokers.”
Calafiore did not elaborate on the kind of education that CIBGNY feels is needed in order to understand or explain the details of an insurance policy. In the self storage industry, however, it is generally believed that tenants who would benefit from insuring the contents of their units are capable of making that determination for themselves if the option to purchase insurance is made available to them.
“Bill for self-storage insurance licensing resurrected in New York.” Inside Self-Storage. March 24, 2010.
“Bill to clarify self-storage specialty insurance licensing in New York.” Inside Self-Storage. May 21, 2009.
Council of Insurance Brokers of Greater New York. “CIB applauds governor’s veto of self-storage insurance limited license bill.” Aug. 6, 2009.
Lancaster, Scott. “The benefits of self-storage tenant insurance.” Inside Self-Storage. March 29, 2009.
“New York governor vetoes self-storage insurance legislation.” Inside Self-Storage. August 5, 2009.
Insurance Committee, New York State Senate. “S7118: authorizes the issuance of limited licenses to self-storage companies for sale of insurance coverage on personal property stored in self-service storage spaces.”
Struewing, Toby. “Tenant insurance: providing peace of mind: more than another value-added service.” Inside Self-Storage. March 1, 2008.