Member Services Update

Importance of covering

By Graeme Armstead, Principal, Hunt & Hunt Lawyers

So the storer has packed all their boxes and moved every asset they own into your facility. The unit isn’t big enough to compact their entire life into the unit so they have decided what to keep and what to throw out, meaning the goods they have in a specific unit, are of great value to them. The next step is managing the risk.

INSURANCE CONSIDERATIONS – RISK MANAGEMENT

Customer Goods Insurance is an exceptionally inexpensive way to create peace of mind for every storer. Using the SSAA Standard agreement as a basis, there are three differing options for each storer to consider: l Insurance provided by the Facility; l Storer’s own insurance; or l Self insuring of the goods.

Each option has positives and negatives to consider prior to ticking that small box, and it is imperative to provide storers with this knowledge at the time of entering into the agreement.

WHAT IS IT?

Put simply, self storage insurance is both the facility’s and storer’s safety net in case anything happens to goods stored in a storage unit. In reality, the likelihood of something happening to the goods in a secure unit is low. Most facilities are purpose built for the job of secure storage with additional security measures. However, it is this small chance or when something simply goes wrong that the investment of insurance becomes your greatest idea yet.

Customer Goods Insurance covers specific and defined events that will sit outside the control of the facility. When signing up to an insurance policy, the Product Disclosure Statement must be reviewed to ensure that not only is there adequate coverage, but that you are not excessively covering events that will increase your premiums – there is no need to have a policy that covers damage from a volcanic eruption in Australia for example.

Similar to the standard agreement which the facility utilises to sign up a storer, there a range of exclusions which may be evident in insurance policies. These can include exclusions for damage arising from vermin, mould, mildew, spontaneous combustion and climatic changes.

LAPSING OF A STORER’S POLICY

Where the storer has elected to take out their own insurance, they will be named in the policy. In normal circumstances, an insurance policy will continue to run unless it is not renewed. Where a storer has indicated that they are purchasing their own insurance, it is the responsibility of the storer to ensure that premiums are paid when due and that the policy does not lapse.

FACILITY’S CONCERNS FOR BUILDING AND CONTENTS INSURANCE

Whilst the standard SSAA template agreement provides for protection from certain claims, it does not remove the facility’s liability entirely. Acting as the General Legal Counsel of Self Storage Australia, we have encountered a number of claims involving potential breaches of the Australian Consumer Law and alleged incidents of negligence.

It is important to note that the Australian Consumer Law holds a number of guarantees to ensure the service being provided is free from defects and fit for purpose. These guarantees are non-excludable, meaning they cannot be removed by way of a contractual agreement.

With reference to negligence, claims of this nature will arise where the facility

has failed to provide the service in an adequate manner. Where the facility falls into disrepair or an error of the facility causes damage to the storer’s goods, the facility may be liable for the damage.

The SSAA attempts to reduce the liability faced by Facilities where a claim under the Australian Consumer law or in negligence is bought against the facility by limiting liability under the SSAA template agreement. The SSAA AU standard template agreement contains the following clause:- Unless specifically itemised and covered by insurance the storer must not store goods that are irreplaceable such as currency, jewellery, furs, deeds, paintings, curios, works of art and items of personal sentimental value or items worth more than $2000 AUD in total.

INSURANCE FOR CUSTOMERS

In the event that anything ever goes wrong and a customer’s goods are lost or damaged it is obviously to the facility’s advantage if that customer has their own insurance. In such circumstances it is likely that any claim will be managed by the customer’s insurer with little if any involvement on the part of the facility. Clearly this is preferable to the facility having to manage claims made by storers whose goods have been lost or damaged. Furthermore it minimises the risks of a claim being made directly against the facility.

The standard agreement contains a clause that is designed to focus the customer’s attention on the desirability of them having proper insurance coverage in respect of their goods. One of the options is to obtain insurance that has been arranged by the facility owner. Due to very strict laws relating to the sale of insurance and the provision of advice concerning financial services great care needs to be exercised by the facility when discussing these matters with the customer. Insurance can only be sold by those who are licenced to do so and without proper training any form of financial advice cannot be provided. This includes advice as to the comparative merits of different policies and advice as to the personal needs of customers. However, it remains possible to provide simple factual advice relating to the general availability of insurance. In practice this means that once you go beyond enquiring whether a customer has insurance and they are directed to the availability of insurance for them you begin to stray into areas that should be avoided.

It is anticipated that the Association will be offering training in this area over the coming months. l

THE KINGS OF SELF-STORAGE

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• Experienced Management Team • Industry Leading Marketing Support • Site Acquisition or New Development support • Comprehensive Staff Training • Leverage group buying power • Over 150 Stores and growing

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For more information contact Martin Richards martin@storageking.com.au or +61 2 9167 8210