Self-depository business owners in Connecticut want to be able to sell property insurance to their tenants, but state insurance regulators think it’s a bad idea.
According to Joe Doherty, lobbyist for the National Self Storage Association, 42 states now allow landlords to sell insurance to unit tenants. He asked the Insurance and Real Estate Committee last week to make Connecticut the next state to approve such sales for customers who store property in their self-serve storage units.
Storage facilities in some states may require tenants to purchase insurance, although under Connecticut’s proposal (Senate Bill 1037) it will remain optional.
Also, under bill as written, the insurance policy must be from an insurance company licensed to write coverage in the state.
Some states exclude owners from all insurance licenses while others require them to obtain a limited line license.
The Connecticut Department of Insurance urged lawmakers to reject the proposal because while it requires owners to obtain a license from the insurance department, it does not require an examination, insurance education or other proof of competence to sell insurance. It will also allow employees to sell coverage under an owner’s license.
The bill also exempts independent warehouse owners from all insurance licensing requirements if they are simply providing promotional materials to their clients on behalf of an insurance company or while engaging in other activities that would normally require a license as an insurance manufacturer including billing and premium collection.
“This combination of marketing and other types of activity can create confusion for consumers about the person or entity responsible for selling insurance. In addition, this framework provides owners with responsibilities normally reserved for licensed producers although without the protections provided by regulatory oversight,” the department stated in its counter testimony.
The Department believes that this “complex” insurance should be sold only by “knowledgeable and qualified insurance professionals” who understand the terms, conditions, exclusions, applicability of other existing insurance coverage, and the potential for significant losses.
Doherty of the depository industry says onsite selling is a convenience for customers and professional agents are not too interested in selling policies because the premiums are low. Owners will be able to receive compensation for billing and billing services on a proposal.
Some but not customers who use self-storage units may have self-owner or renter coverage for off-site private property, according to Doherty.
The premium for a separate policy for property in own warehouse depends on the size of the room and the value of the contents. Costs can range significantly from $6 per month for $1,000 coverage to $20–$25 per month to $15,000, according to online insurance shopping site Insurify.
According to online financial site Value Penguin, the two largest companies specializing in self-deposit insurance are SafeStor and MiniCo.
MPs did not take action on the action at the committee meeting.