Do You Need Insurance When Keeping Your Stuff in a Storage Unit?
Your homeowner's policy might insure your stored goods, but it isn't likely to provide enough coverage.
Close to 10% of American households use storage units. If you're in the process of moving, have just moved into a smaller home, or just have too much stuff, you might be one of them (for related reading, see You're Moving! Here's Why You Need Insurance).
If you're willing to pay for someone to hold all of that stuff, chances are you want to keep it safe. So, is it worth getting insurance for all your stored property?
The Storage Facility’s Insurance
Right off the top, it's important to understand that the storage facility has insurance, but it's to protect them, not you. If the building burns down, the facility can file a claim and recover its losses. You, on the other hand, will recover nothing, no matter how many of your things were damaged.
Homeowner’s or Renter’s Policy?
What about your homeowner's or renter's policy? It covers your personal belongings, so will it cover them while they're held in a storage unit?
It might or it might not. And even if it does offer you some coverage, you might want to consider getting more.
There are a few issues you might face if you're relying on your home or renter's insurance policy to cover your stored items, including:
- Some policies limit coverage to 90 days
- Off-premises coverage (meaning coverage for items that are not in your house or apartment) is typically limited to 10% of your overall coverage, which might not be adequate if you're storing anything valuable
- Homeowner's and renter's policies almost always have deductibles, and they can be substantial (although some policies are designed specifically with storage units in mind and have a lower deductible, or even a zero deductible if you're willing to pay a slightly increased premium)
- While these policies sometimes provide coverage for damage or loss caused by theft and fire, they rarely cover for damage from floods, earthquake, mold, or mildew
What if you rent a storage unit that is dropped off on your property? As long as it remains parked there, your coverage is usually the same as it is for the items in your house. If you move the unit off your property, however, it will likely be considered off premises coverage and will be restricted accordingly.
Cash Value vs. Replacement
Does the insurance policy provide cash-value or replacement coverage?
Cash-value coverage takes into account the damaged or stolen item's depreciation. That means your coverage slowly decreases over time as the insured items lose value.
Replacement coverage, on the other hand, pays you to replace the item at today's prices. Since the value of your insured items will depreciate over time, replacement coverage means your coverage will actually increase slowly over time.
Replacement coverage is the more attractive of the two options, and it usually only costs about 10% more than cash-value coverage so it's definitely worth considering.
If you keep your business-related items in your home, your homeowner's or renter's policy will not cover them unless you have specifically provided for such coverage (learn more in Working from Home? You Might Need Insurance for That). It's the same with storage units. If you're a contractor who keeps their equipment in a storage unit, for example, you'll need commercial insurance to protect it.
Where to Buy the Insurance
If you decide to buy insurance for your stored items, where can you get it?
Start by asking the insurer you buy homeowner's or renter's insurance from. If they don't sell insurance that could cover your stored goods, talk to a knowledgeable broker and ask the storage facility if they know of any companies that deals in this kind of coverage (many facilities have arrangements with insurers).
Keep in mind, however, that policies written exclusively for storage units often provide narrower coverage than homeowner's or renter's insurance. Read the policy carefully, and you might want to consult with a broker and compare different offerings, both in terms of price and coverage. They might be able to find you a policy that beats the one offered through the storage facility.
Head Off Problems
It's comforting to know you're covered. It's even better never having to collect on your policy. Here are a few things to consider when choosing a storage facility that will keep your property secure.
- How good is the security at the facility? Do they have cameras? Guards? Alarm systems? Did you have to go through any kind of check-in procedure when you visited the facility?
- Is the storage unit in a flood zone? Low-lying areas tend to have cheaper land, so it's not uncommon for storage facilities to be built on them. A flood zone might not be the best place to keep your possessions, especially if your unit is on the first floor.
- How clean is the facility? Does it look like it's being kept up?
- Are there any temperature and humidity controls? Depending on what you're storing, this might be important, especially if the area is humid. The last thing you want when you go to retrieve your items is to discover that some of them he been warped by the heat and that your books and documents have been damaged by the humidity.
- What do other people say about the site? Check online for reviews of the facility. One ex-customer venting their gripes online might not necessarily be a red flag – it's impossible to please everybody – but be cautious if there are a lot of dissatisfied unit renters. Pay special attention to common complaints shared by multiple reviewers.
If it’s worth going to the trouble of paying to store your possessions, it’s probably worth it to insure them. Storage unit insurance is generally priced moderately, so check out what's available.
Written by David Hughes | Writer/Researcher
David Hughes worked as a researcher and writer for two California litigation law firms between 1988 and 2005, and has worked on a freelance basis since then. His areas of expertise include personal injury litigation plaintiff and defense, medical malpractice plaintiff, contract law especially contracts of insurance, insurance bad faith litigation defense, insurance coverage opinion letters, administrative law defense . He also taught English in China and Azerbaijan for eight years and worked as a welder in shipyards in the San Francisco Bay Area for seven years. He is an outdoorsman and loves being in the mountains.