Pollution Coverage for Self Storage Facilities
By Amanda Duncan, President, PartnerOne Environmental
There are over 50 million self storage facilities currently operating across the United States today. The self storage industry continues to grow as demand for space remains high; it is an industry that doesn’t seem phased by our volatile economy. Owners of these businesses are finding a great deal of success and they should carefully protect their investment. From an insurance perspective, the highest priority for this class is usually securing General Liability and Property policies. However, self storage facilities also have a significant pollution exposure, which is generally excluded from their other policies.
Mold can become an issue at self storage facilities. Water intrusion from HVAC systems, sprinkler systems, leaking piping, or weather events could cause mold to grow rapidly and easily spread to several units. Damaging storms and flooding can cause excessive surface water and silt runoff, impacting neighboring properties or waterways such as ponds, streams, or rivers, as the runoff may contain hazardous materials that have pooled onsite. Should a waterway become impacted, not only is the quality of water at risk, but the plant and animal life as well (natural resources).
Unfortunately self storage facilities can be very attractive locations to illegally dispose of potentially hazardous waste, drums, and containers. This practice is commonly referred to as â€œmidnight dumping.â€ The drums and containers are almost never appropriate to properly contain the waste and the contents are easily released onto the property. In addition, criminal activity at these facilities is also a growing concern. Illegal methamphetamine labs are established in abandoned properties regularly, with the remnants left behind after those involved move on.
Older self storage buildings may have existing asbestos insulation and tiles, as well as lead paint and lead piping. Leaking heating oil tanks, piping, and equipment used onsite for day-to-day operations may also exist, with possible spillage of petroleum hydrocarbons affecting soil at the facility.
Self storage property owners and managers should consider purchasing a Site Pollution (PPL/ EIL) policy. These policies cover both third party and first party claims, including Defense Costs, resulting from pollution conditions at, on, under, or emanating from scheduled locations (in this instance self storage facilities). Policies are tailored to address environmental hazards such as mold, storage tanks, midnight dumpling, in place asbestos and lead, soil/groundwater contamination, and improperly (or illegally) stored waste. Additional enhancements readily available include Transportation Pollution Liability for any loading/unloading and transport of materials, as well as Non Owned Disposal site coverage should any onsite waste be taken to a 3rd party disposal facility for handling. Premiums start as low as $3,000 for Site Pollution policies.
Self Storage facilities, old and new, will be a part of the real estate landscape for years to come and as with any business, many liability exposures are present. Insurance solutions are readily available. Self storage facility owners should consider a Site Pollution insurance policy to properly address their environmental exposures and protect their long term business investment.