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06 Apr Several State Associations Pushing Self Storage Insurance Laws

By Alex Hassel, Storage.com

For many self storage operators, it’s standard practice to offer insurance with a tenant’s rental. However, there are some who worry whether or not this could become a legal issue. At this time, in 30 states, there are no laws that say it’s illegal for storage employees to sell insurance, but there aren’t any laws that say it’s legal either.

Not all self storage facilities offer insurance, but those that do can sell on behalf of other third-party providers. However, some operators in states with unclear laws are concerned that the insurance commission or legislators could question the legality of such sales. That’s why so many states are working to set the record straight before an issue arises.

Self storage associations in Colorado, Hawaii, Louisiana, Massachusetts, Missouri, and Pennsylvania are lobbying to join the other 20 states with laws that do clearly allow self storage insurance sales from an operator.

The Missouri Self Storage Owners Association (MSSOA) is lobbying for a pair of bills: HB 2167 and SB 780. These would create a regulatory system for self storage insurance and the selling of such insurance. The bills basically say that a storage operator can sell insurance as long as they’re trained and offer the appropriate information and brochures to a tenant upon a rental. Each storage facility would have to apply for a license to sell insurance, and training would have to be provided by the actual insurance company.

The MSSOA has been lobbying with help from the Self Storage Association (SSA) for three years to pass an insurance bill but hasn’t had any success yet. The associations have been tweaking the language to make HB 2167 and SB 780 stronger.

Kathryn East, Executive Director of the MSSOA, says it’s important to make it officially legal for storage operators to sell insurance before any issues arise. “Right now, there’s no clarification,” she says. “The offering of tenant insurance is up for interpretation by anyone. It’s dangerous when things are left for interpretation. The insurance commission and legislators could come in and say, ‘Wait, is this right?’ Now, we’re beating them to the punch and making clear legislation that we want to do this. We’re being proactive rather than reactive.”

East continues, “It’s important for operators to understand that it’s intended to protect them from a definition that could hurt them. For Missouri operators who don’t offer insurance, it doesn’t affect them. For those who do, though, it regulates the storage operators and third-party insurance providers.”

At the time this article was written, the Missouri House’s Property, Casualty, and Life Insurance Committee had passed HB 2167.

The Massachusetts Self Storage Association (MASSA), with help from the SSA, is making a push for a self storage insurance law in its state as well. The MASSA is lobbying for H.802 and S.533. These bills are similar to Missouri’s, essentially saying that the state can issue a self storage company a license to sell renter’s insurance, and a storage operator can only sell insurance in connection to the rental space with respect to the renter’s personal property. A self storage operator or manager must also provide the appropriate information and brochures to a tenant upon a rental.

Comparable bills were proposed in Massachusetts’ 2013-2014 session but died. Michael Kane, President of MASSA, says things are looking good for the 2015-2016 session. “There haven’t been any issues with S.533. Senator Michael Moore, the bill’s sponsor, has presented it as being very pro-consumer, and it is.”

Kane also says there haven’t been any self storage insurance sales in question in Massachusetts, and he wants to make sure it stays that way. “It’s a pre-emptive strike. We want to get everybody on the same wavelength before something happens. It protects the consumer and it protects us. We’re trying to professionalize the industry, which is always good.”

At the time this article was written, the Massachusetts Senate Financial Services Committee had reported S.533 as favorable and referred it to the Senate Ways and Means Committee.

Missouri’s legislative session for this year ends on May 13, 2016. Massachusetts’ ends July 31, 2016.

As far as the other states go, Colorado’s bill has been deferred until next year. Hawaii’s HB260 HD1 is moving forward with the state’s legislative session ending May 5, 2016. Lousiana’s HB798 is moving forward with the state’s legislative session ending on June 6, 2016. Pennsylvania’s HB 1669 is moving forward with the state’s legislative session ending November 30, 2016.

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