Let’s look at ways to reduce our insurance cost in 2026 and beyond. This expense line item is doing nothing but rising, and even though we had relatively calmer weather in 2025, excluding the west coast, more frequent and costly events are coming our way.
Last week we had Terry Campbell, of Johnson Insurance, visit us in the Inner Circle. Here are some of the tips he gave us last Friday.
Consider Master Policies
If you have more than one facility, explore a Master Policy, especially if your projects are spread over different geographical locations.
Insurance companies like this because they feel their risk is spread around and often offer lower rate quotes.
Security Upgrades
Make sure you focus on your facility’s security features and consider your insurance implications as you are doing renovations or putting a new project into service.
Here are some of the basic features that can help lower your rate:
- Fence
- Gate
- Camera
- Code entry doors on buildings with halls
- Even smart locking systems are a feature you can tout to help lower insurance cost
Make Sure Your Agent Understands Self-Storage
I have personally experienced what can happen when an agent doesn’t understand how to value and what is important in owning and running self-storage.
It can cut two ways. Often, I see people who, on advice of their insurance agent, overinsured their facilities. Remember, storage is unlike all other asset classes when it comes to replacement value.
However, I have seen many owners undervalue their projects. They built their facility eight years ago for $45 per square foot or something and have insured it for years at, or close to, that value. Believe me, you would be hard pressed to replace it today for that. Keep up with construction cost and, depending on how you would replace, adjust your insured amount accordingly.
Also speaking of agents, Terry suggested, although he acknowledged this is counterintuitive, that having one agent go into the marketplace rather than many benefits the storage owners. He said a good agent will, after getting quotes from multiple carriers, have them rebid competitively against each other to get the winning quote.
That makes sense to me, and do with this information what you will.
Tenant Insurance
Yes, besides making money selling tenant insurance or tenant protection, it can lower your rate because insurance companies feel protected. They feel there is another layer between them and your customers.
Another reason to make tenant insurance a mandatory policy.
Deductibles
I have in the past coached on having the highest deductible you can tolerate and afford. We usually have a $10,000 deductible.
Perhaps still a good strategy. Terry indicated some of his clients have $100,000. That’s above my income level, but not everyone’s who listens, reads, or watches this.
But one thing I did learn Friday about deductibles is that his coaching, as a good rule of thumb, is to not make a claim unless the claim is 3 times your deductible. The cost of funding that claim yourself is equal to or less than the increase in premiums you will most likely receive over the next few years by making the claim.
So perhaps we should have our deductible amount be determined by the 3x rule. Our different ownership teams will decide.
Also, make sure you understand the deductible in your policy. Is it a deductible per claim, or per building? You may be surprised.
Make Your Facility Safe
I didn’t realize this, but the biggest insurance claims are liability, not weather-related. So here are some tips to help make sure your facility is safe.
Train yourself and/or your employees to:
- Always make sure gutters are cleaned and flowing.
- If not, the water backs up and flows into units.
- Even though your lease says you are not responsible, a good attorney claims negligence and your insurance company must defend. Your rates go up.
- Make sure sidewalks are even and salted when icy or snowing.
- Always be on the lookout for hazards and problem customers or tenants.
- Make sure roofs are inspected and screw-down roofs are walked and bad screws replaced at least twice a year.
All of these practices can make your facility less open to liability lawsuits, which affects your insurance rates.
Must Have Insurance Riders
There are three or four must-have additional insurance riders owners really need.
- Wrongful disposition insurance.
- This protects you against making claims and suits due to your auctioning.
- Be sure to have a rider that covers you, or maybe two riders depending on the carrier. Be sure you are covered no matter if you did everything right, or if you made a mistake. Even if done correctly, anyone can file a suit and that alone can drive up rates.
- Environmental Hazard Rider.
- This protects you, say up to $25,000 per unit, if you need to clean up an environmental problem a tenant caused. Let’s say someone rented a unit and left ten 55-gallon buckets of glowing stuff. You have got to get rid of it and you can’t just dump it down a drain.
- Cyber Insurance.
- To be honest, this is new to me, but the number of facilities that have been hacked and the liability we are exposed to is scary. For the cost of the rider compared to risk, this is perhaps one of the better decisions we can make.
Nothing has gone up more exponentially in our operating expenses over the past few years than insurance has. You can bet your tail these are the things we will be focused on in the upcoming years as we reduce our insurance expense in our facilities.
I hope this has helped you as well.
