Government Affairs - Self-Service Storage Insurance Bill Resurfaces

Representative Samantha Kerkman (R-Burlington) and Senator Van Wanggaard (R- Racine) are re-introducing legislation this session to allow self-service storage unit owners and employees to sell insurance without being licensed. A national group called the Self Storage Association (SSA) is advocating for the measure around the nation and claims over 40 states have passed similar legislation. Interestingly, Wisconsin self-storage unit owners are already allowed to offer insurance through a licensed intermediary.

Like similar efforts in prior legislative sessions (three consecutive sessions to be exact), this year’s version continues to chip away at long-standing consumer protections embedded in agent and company licensing regulations designed to ensure consumers understand what they are purchasing should an unexpected loss occur. Wisconsin has a reputation for strong, balanced regulatory climate designed to benefit both consumers and industry. Self-storage insurance is notoriously known for limited coverage for certain items like art or antiques and often does not cover climate, theft or pest related claims. Moreover, policyholders may already have sufficient coverage under their homeowners or rental policy, making the argument that purchasing storage insurance could be duplicative and should be made through a licensed agent. Sometimes coverage of property may also be covered under a separate policy or even under the consumer’s credit card agreement.

The current version of the bill would allow self-storage owners and employees to sell property coverage to their customers if the following conditions are met:

1. An insurer or third party supervising entity directly supervises and trains the self-storage owners and employees (insurers are responsible for supervising the administration of the sale). 2. The insurer or entity maintains a registry of their self storage locations and makes the list available to the Commissioner of Insurance upon request. 3. And although an improvement from previous bills, the current legislation would require self-storage coverage to be primary over any other coverage for the same loss.

The proposal also sets up a series of minor consumer disclosures. For example, it includes a requirement that consumers have the right to file a complaint with the Office of the Commissioner of Insurance (OCI). The OCI would be able to issue a fine to selfstorage owners up to $500 per offense and prohibit future sales. However, because self-storage insurance employees and owners do not have to be licensed by the OCI, the department would likely have minimal regulatory oversight to remedy consumer complaints should an employee mislead or misinform a consumer concerning coverage details or pocket premium dollars meant to secure coverage. In both scenarios under existing law, the OCI can issue an administrative action against an insurer or revoke an agent’s license, when necessary. Other disclosures include a notice that the policy may duplicate coverage offered under a renters or homeowners policy and they must also disclose enrollment if their insurance coverage is not required to obtain rental space.

Allowing self-storage operators and their employees to sell insurance without a license can be a slippery slope because other industries are sure to follow seeking a similar exemption. Selling insurance products without a license and with no regulatory controls is ripe for disaster and is plain just bad public policy. IIAW’s Board of Directors discussed this issue in depth at its recent spring meeting in Kohler, Wis. and the Association is fully prepared to oppose the bill when it is introduced and a public hearing is held later this year.

IIAW Lobbyist