23 May Michigan Passes Self Storage Tenant Insurance Bill
By Alex Hassel, Storage.com
Michigan has become the 22nd state to allow point-of-sale self storage tenant insurance. Self storage operators in the state are celebrating after Governor Rick Snyder recently signed House Bill 4636 into law. This means self storage operators no longer need a license to sell limited line insurance to renters.
While storage associations in other states have been lobbying for similar laws as a precautionary measure, Michigan has had some complications in the past when storage owners and managers have tried to sell insurance to their tenants. Tim DeWitt, Executive Director of the Self-Storage Association of Michigan (SSAM), says it was considered illegal in Michigan before the law was passed.
“There was an out-of-state, third-party insurance company offering insurance to self storage vendors in Michigan, but then a red flag came up from the Department of Insurance and Financial Services (DIFS),” he says. “It found out there were self storage employees passing out literature for the company. That company had to cut a consent agreement with the DIFS because what was happening was illegal.”
DeWitt adds that, without this option, making insurance available was much more difficult and, in many ways, impractical.
“A lot of people couldn’t get insurance otherwise,” he says. “Someone in the military, for example, can’t cover their items in storage with homeowners insurance because they likely don’t have a home. Many people don’t own a home, so they can’t get coverage that way. If you called a licensed agent to get a policy on your stored belongings, they wouldn’t do it because it wasn’t worth the money. Then, to have self storage operators or managers get a license wasn’t practical for something like a $10 policy.”
No one was disputing the legality of selling on-site insurance, but many did approach the SSAM about changing the law. In 2015, the SSAM lobbied with the Self Storage Association’s (SSA) assistance, and Representative Bruce Rendon sponsored House Bill 4636. It passed in both the House and Senate, but it didn’t make it past Governor Snyder’s desk.
DeWitt explains, “He got some heartburn about some of the checks and balances. Some insurance agents and the DIFS were really complaining to him, too.”
In 2016, though, the SSAM and Representative Rendon worked out the bugs, and the bill passed into law. Now, a manager at a self storage facility can legally offer a renter a brochure about storage insurance, and then after a renter fills out the paperwork, they can forward the forms on to a third-party insurance company.
“I think at the end of the day, it protects our customers and gives them options they wouldn’t have had before,” says DeWitt.
The storage industry is celebrating the win, even nationally.
“The exemption of self storage tenant insurance from general producer laws in Michigan is a tremendous victory for the industry and an example of the productive, collaborative relationship between the national and state associations,” says Tim Dietz, SSA President & CEO.
Dietz continues, “This initiative began several years ago and required a nimble and substantive dialogue with the insurance department, the Governor’s office, and the legislature. This impressive work by the Michigan SSA team provides clarity on a regulatory element that has long been a source of uncertainty for the sector.”
“The insurance bill is frosting on the cake,” DeWitt says. “This is pretty big for us. We just celebrated seven years as an association, and we’re already five for five on self storage legislation.”