Connecticut Regulator Opposes Letting Self-Storage Businesses Sell Insurance to Tenants

March 14, 2023

Owners of self-storage businesses in Connecticut want to be able to sell property insurance to their tenants but the state insurance regulator thinks that is a bad idea.

According to Joe Doherty, lobbyist for the national Self Storage Association, 42 states now permit owners to sell insurance to unit renters. He asked the Insurance and Real Estate Committee last week to make Connecticut the next state to approve such sales for customers who are storing property in their self-service storage units.

Storage facilities in some states can require tenants to buy insurance, although under the Connecticut proposal (Senate Bill 1037) it would remain optional.

Also, under the bill as written, the insurance policy must be from an insurer licensed to write the coverage in the state.

Some states exempt owners from all insurance licensing while others require them to obtain a limited lines license.

The Connecticut Insurance Department urged the lawmakers to reject the proposal because while it requires the owner to obtain a license from the insurance department, it does not require any examination, insurance education or other evidence of competency to sell insurance. It would also permit employees to sell the coverage under the owner’s license.

The bill also excludes self-storage owners from all insurance licensing requirements if they only make promotional materials available to their clients on behalf of insurers or when engaging in other activities that typically require licensing as an insurance producer including premium billing and collection.

“The combination of marketing and these other types of activities may cause confusion for the consumer as to the person or entity responsible for the sale of insurance. In addition, this framework provides the owners with responsibilities typically reserved for licensed producers although without the protections provided by regulatory oversight,” the department stated in its opposition testimony.

The department maintains that this “complex” insurance should be sold only by “knowledgeable and qualified insurance professionals” who understand the policy terms, conditions, exclusions, applicability of any other existing insurance coverage, and the potential for significant losses.

The storage industry’s Doherty said on-site sales are a convenience for customers and professional agents are not very interested in selling the policies because the premiums are low. An owner would be able to receive compensation for billing and collection services under the proposal.

Some but not all customers who use self-storage units may have their own homeowners or renters coverage for off-premises personal property, according to Doherty.

Premiums for a separate policy for property in self-storage depends on room size and value of the contents. The cost can range significantly from $6 monthly for $1,000 in coverage to $20–$25 monthly for up to $15,000 in coverage, according to the online insurance shopping site Insurify.

According to the online financial site Value Penguin, the two largest companies that specialize in self-storage insurance are SafeStor and MiniCo.

Lawmakers took no action on the measure at the committee hearing.