Are You Insured Correctly?
In today’s self-storage market, risk management isn’t just a compliance exercise, it’s critical to protecting your business, your reputation, and your long-term success.
At Basil Fry, we work closely with operators across the sector to ensure their insurance arrangements genuinely reflect the risks they face. Yet one of the most common issues we encounter is simple, many businesses are not insured correctly.
The Hidden Risk of Underinsurance
Insurance should provide peace of mind and not just tick a box. However, underinsurance is widespread. Recent surveys suggest that a large proportion of UK commercial properties are insured below their true value. For self-storage operators, this can have serious financial consequences.
If your sums insured are too low, the average clause can apply. This means your insurer will only pay a proportion of any claim, even for partial losses.
For example:
If the cost to rebuild your building is £10 million but insured for only £7 million, you are effectively 70% covered. A £1 million claim could result in a payout of just £700,000, leaving you to fund the remaining £300,000.
That shortfall can be the difference between recovery and long-term disruption.
Getting Your Property Values Right
Buildings
When insuring your property, it’s essential to base your sum insured on rebuild cost and not market value.
This should include:
- Full reconstruction costs
- Labour and materials at current prices
- Debris removal
- Professional fees
- External structures such as walls, gates and yards
Market valuations or mortgage figures are not suitable for insurance and often exclude key elements. We recommend reviewing rebuild costs regularly, with a professional valuation at least every three years.
Fit Out and Improvements
Self-storage facilities often include significant investment in:
- Units and partitioning
- Access systems
- Security infrastructure
These costs must be reflected accurately in your cover. If you lease your building, these may fall under tenant improvements which is something many operators overlook.
Plant, Equipment and Contents
From forklifts and generators to reception desks and IT equipment, all operational assets must be insured at full replacement cost.
Most policies operate on a “new for old” basis, meaning insurers will pay to replace items as new. Declaring second-hand values can result in underinsurance.
Don’t Overlook Business Interruption
Property damage is only part of the risk. What many operators underestimate is the impact on income.
If your facility suffers a major loss:
- Planning and design could take up to a year
- Rebuild and fit-out could take two more
- Returning to full occupancy could take even longer.
In reality, it may take five years or more to fully recover which is why Business Interruption cover is essential.
This should ensure your gross revenue, not profit, includes a realistic indemnity period (often up to five years) and factors in future business growth, not just past figures. Underestimating this exposure is one of the most costly mistakes operators make.
Liability Risks: Protecting Your Business and Reputation
Liability insurance covers claims arising from injury or property damage, including:
Employers’ Liability – for employee injuries and Public Liability – for customer or visitor incidents. Claims can be expensive and disruptive, but many are preventable.
Simple controls can significantly reduce risk:
- Keeping walkways and loading areas clear
- Maintaining safe floor conditions with documented checks
- Providing clear signage
- Training staff and maintaining procedures
- Good housekeeping doesn’t just reduce claims, it strengthens your defence if a claim is made.
Customers’ Goods: A Changing Landscape
Changes in regulation have made it more difficult for storage operators to offer traditional insurance products directly to customers. As a result, many operators are looking at alternative ways to provide protection for customers’ stored goods.
Introducing StoreProtect
StoreProtect is not insurance and does not provide insurance cover. Instead, it is a contractual protection solution offered by the storage operator, designed to provide customers with protection for their stored goods.
It provides:
- Protection on a replacement-value basis (subject to terms, conditions and exclusions)
- A clear and transparent alternative to insurance
Managing Customers’ Goods Risk
One of the biggest challenges in self-storage is under-declared customer values. When a claim occurs, responsibility can quickly shift towards the operator regardless of who declared the value.
To reduce exposure:
- Ensure terms and conditions are clearly agreed in writing
- Educate customers on the importance of accurate value declarations
- Send regular reminders
- Maintain a clear audit trail of communications
- Consistent communication is key to managing expectations and protecting your business.
The Most Common Claims And How to Prevent Them
Most customer goods claims fall into four categories: fire, theft, vermin, and flood/water ingress.
Fire
- Control what can be stored
- Enforce no-smoking policies
- Maintain detection systems
- Manage contractor work (especially hot works)
- Keep fire risk assessments up to date
Theft
- Secure perimeter fencing and access points
- Install high-quality locks and CCTV
- Train staff to identify suspicious behaviour
Vermin
- Maintain site cleanliness
- Implement professional pest control
- Eliminate entry points into buildings
Flood and Water Ingress
- Understand your flood risk
- Maintain drainage and roofing
- Install protective measures such as raised floors
- Have a clear emergency response plan
- Early notification to insurers is essential in all cases.
Cyber Risk: The Emerging Threat
As the sector becomes more technology-driven, cyber risk is increasing. Online bookings, payment systems, and customer data all create new exposures. Attacks such as phishing, ransomware, and payment diversion are becoming more common, particularly for smaller operators.
A cyber incident can lead to:
- Operational disruption
- Loss of data
- Regulatory consequences
- Reputational damage
Cyber risk should now be treated as a core business risk, supported by staff awareness, strong controls, incident planning, and appropriate insurance cover.
Final Thought: Don’t Assume. Review, verify, and validate your cover.
Insurance isn’t just about buying a policy.
It’s about:
- Understanding your risks
- Declaring accurate values
- Putting the right protections in place before something goes wrong
