The Akron Legal News

Supplemental insurance for self-service storage proposed

TIFFANY L. PARKS
Special to the Legal News
Published: April 21, 2014

In campaigning for the passage of a bill to regulate self-service storage facilities, Rep. Stephanie Kunze said if an individual does not have homeowner’s or renter’s insurance, there is no insurance product in Ohio they can buy to protect their belongings in storage.

“Even if a customer does carry homeowner’s or renter’s insurance, they may be underinsured and this bill would allow them the option to purchase insurance specifically to protect their belongings in storage,” said Kunze, R-Hilliard.

“Almost 10 percent of homeowners rent a self-service storage unit. While (a) standard homeowner’s or renter’s insurance policy provides some coverage for property damage, there is no legal framework in Ohio for customers to purchase supplemental limited lines insurance coverage for their property in self-service storage units.”

House Bill 430, jointly sponsored by Kunze and Rep. Michael Stinziano, D-Columbus, would establish a way to purchase supplemental insurance to cover belongings stored in self-storage.

The measure would require self-service storage facilities to have a limited lines license from the Ohio Department of Insurance in order to offer, sell or solicit coverage under a self-service storage insurance policy.

“The license may only be granted if the sale of the limited lines insurance is incidental to their business, the self-service storage facilities train and educate their employees, and follow other guidelines set by the superintendent and the legislation itself,” Kunze said.

HB 430 would permit the insurance superintendent to collect a licensure fee from each licensed self-service storage facility and each applicant for a self-service storage insurance limited lines license.

Under the bill, self-service storage insurance may be offered on a month-to-month or other periodic basis under an individual policy, or as a group, commercial or master policy issued to a self-service storage facility to provide insurance to the facility’s customers.

The proposed legislation would require each insurer providing self-service storage insurance to supervise, or to appoint a business entity licensed as an insurance agent to supervise, the administration of a self-service storage insurance program.

“Further, this legislation offers many consumer protections, for example, the self-service storage facility cannot require customers to purchase the limited lines insurance only from the facility,” Kunze said.

A bill summary states an endorsee would be prohibited from “making any statement or engaging in any conduct, express or implied, that would lead a customer to believe that, if self-service storage (insurance) is required as a condition of a self-service storage rental agreement, that the customer’s purchase of self-service storage insurance offered by the self-service storage facility is the only method to meet that condition, or that the self-service storage facility or the endorsee is qualified to evaluate the adequacy of the customer’s existing insurance coverage.”

The summary also states that if insurance is required as a condition of a self-service storage rental agreement, the bill stipulates that this requirement may be satisfied by the customer purchasing self-service storage insurance that is sold, solicited or negotiated by the facility, or the customer presenting evidence of other applicable insurance coverage.

HB 430 would require an endorsee to disclose that self-service storage insurance may duplicate coverage already provided under a customer’s homeowner’s insurance policy, renter’s insurance policy or other coverage.

In addition, Kunze said a self-service storage facility would have to provide other disclosures to customers, including the identity of the insurer, amount of any deductible and how it is to be paid, benefits of coverage and that the customer may cancel the coverage at any time and receive a refund of the applicable premium.

HB 430 would regulate the handling of proceeds from the sale of self-service storage insurance, requires notice for changing the terms of or terminating a contract for self-service storage insurance, except when the contract is terminated by the customer, and would allow the insurance superintendent to adopt rules to implement the bill’s provisions.

If enacted, the proposal would authorize the superintendent of insurance to take administrative or other action as provided in the bill and current law, including a hearing process, with regard to any violation. The bill details penalties for violations.

“If the self-service storage (facility) violates any of the consumer protections, the superintendent of insurance may issue a cease and desist order and assess a $25,000 penalty,” Kunze said.

HB 430 is before the House Insurance committee.

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