Why Insurance Should Never be an Afterthought in Self-Storage

Insurance isn’t a last-minute thing. James McLean and self-storage insurance experts Terry Campbell and Natalie Winters discussed how developers, operators, and owners should think about insurance upfront, not as an afterthought. Proper coverage takes time to shop, so when you're planning underwriting and pro formas, factor insurance in early to avoid big surprises down the line.

James McLean: Hey everybody, we're here with Terry Campbell. This guy is a self-storage legend, especially the insurance space. But Terry, you know, a lot of times for my clients and people in self-storage or any space, insurance is an afterthought. And you know, that seems to be a major red flag, leaving you open to a lot of risk. How should developers or people in acquisition, owner, operators think about insurance and when?

Terry Campbell: That’s a very good point. We see that a lot as well. We see them coming in the last minute, looking for a quote. It's not like your homeowners or your car insurance where you can just get a quote in a day or two, maybe three. We need weeks to do this right for you. We're going to go out and shop this with a lot of carriers. We need all the information up front so we can do the right job for our customer and get them the best coverage and the best price.

James McLean: And then Natalie, how should these owner operators think about insurance and when they're starting to put together their underwriting and pro formas and trying to get lending?

Natalie Winters: And that's it. When you're doing your pro forma and you want to see how your property is going to cash flow, you want to factor in insurance. More times than not, we have these deals that are done at the last minute and the property owner gets their quotes and like, oh my gosh, it's triple, it's quadruple what I thought it was going to be. And there's different wind risks. There's different coastal regions. There's different factors like the age of your building that goes into factoring in the rates on your property. So you need to be well-informed either from the previous owner or from doing your due diligence.

James McLean: Got it. That's such an important point. Guys, insurance is an important, I'd say necessary thing to do your homework on. Do not wait till the last minute. This is not like your finals in college. You can't crunch it at the end.