How do deductibles really work, and could a 5% deductible cost your self-storage facility far more than you think?
In this episode of Outside the Box, Terry Campbell of Johnson Insurance revisits the questions that came up most during a recent presentation to self-storage owners, buyers, and investors, with a focus on deductibles, flood coverage, and how to think about premium.
Terry walks through a simple example: a $2 million facility with two damaged buildings and a $500,000 replacement cost. With a $5,000 flat deductible, the math is easy. With a 5% wind and hail deductible, many owners expect to pay $25,000. But when that percentage is based on the insured value rather than the damage, the deductible can be $100,000, or $75,000 more than expected.
In this episode, Terry covers:
- What a deductible really means in commercial insurance
- Flat deductibles vs. percentage deductibles
- Why wind, hail, and other catastrophic coverages often carry percentage deductibles
- How deductible percentages can vary by location
- A side-by-side example of a fire loss vs. a wind loss on the same facility
- Why flood coverage is worth considering, even outside a FEMA-designated flood zone
- Lessons from Hurricane Helene in Western North Carolina
- Lender requirements for facilities in flood zones
- How premium affects NOI and facility value
- Why getting the coverage right should come before chasing the lowest price
Deductibles and coverage terms vary by carrier and policy, so it is important to review your specific policy before a loss happens. Understanding how your deductible is calculated can help you plan ahead and make sure your facility is in a position to handle it if something happens.
Have questions about your current coverage or preparing for an acquisition? Connect with Terry Campbell and the Johnson Insurance team.
