Proof of Insurance and Registration Information for Vehicle Storage

Mini- Storage Messenger - Proof of Insurance and Registration Information for Vehicle Storage

QUESTION: Recently several of my customers have been resistant to my policy of requiring proof of insurance and proof of current registration before I will rent a vehicle storage space. This is something you have recommended in the past. How important is it actually?

ANSWER: Vehicle storage is a different business than self storage, particularly in states where the self-storage statue does not specifically discuss disposal of a vehicle in the event of a default. It is different because it is hard to remove a vehicle from your self storage facility, since unlike the typical items found in a self storage facility (furniture, clothes, toys, etc.), vehicles have titles and in order to sell or dispose of a vehicle properly you must obtain title in order to convey it. While there is little doubt your self storage lien applies to a vehicle in storage, getting the title is tricky, at least in most states, and expensive and time consuming in all states.

Vehicles, unlike used mattresses, have an easily defined value. For example, a vehicle in storage that is lost or stolen can still be looked up in the Kelly Blue Book to obtain a pretty good estimation of value. While all vehicles depreciate quickly, the residual value of most vehicles is more money than you may be comfortable storing at your facility without some knowledge that the property is insured.

It is all of these reasons that we have recommended in the past that self storage operators require a copy of, at a minimum, the title, registration (and that the registration must be current) and proof of insurance.

We require proof of title and registration so that we know that we are entering into a relationship with the legitimate owner of the vehicle, the car is not in the self storage facility to be hidden in a domestic relations or crime situation and/or to be “parted out”, which was a big problem in the industry a few years ago. Insurance is required because the value of the vehicle is often more than what you would be willing to accept if there was a loss to the vehicle and someone felt you were liable for that loss. , Thus, if you have value limitations in your lease the vehicle usually exceeds the value limitations and the way you are willing to allow the vehicle to be stored is because it is insured which means it is less likely you will be liable for or will hear about a loss or damage even if it happens.

Please do not lose sight of the fact that if the vehicle is merely going to be “stored” and not used (an example is someone is storing a classic car or car they wish to eventually refurbish), then the liability portion of the automobile insurance can be dropped which will save your tenant some money if your tenant is upset about the requirements to maintain insurance on a vehicle that they will absolutely, positively not be operating.

It is my personal opinion that you do not want vehicles brought on to your property that are not operable or that an owner would not want to keep registered and operable, it seems only a recipe for disaster.

The final issue is you want to try to separate your current and/or good tenants from the bad when it comes to vehicle storage. What I mean by this is a tenant who is willing to keep the vehicle insured and keeps up current registration is probably not as interested in using your self storage facility as a dumping ground for a broken down vehicle.

Think about the following, if I have a broken down vehicle, my neighborhood association is on me or the city is on me for a zoning violation and for $1.00 for the first month I can move it into a vehicle storage space and then forget about it forever and make the vehicle your problem as the self storage operator, why wouldn’t I do that? If I have a vehicle that is involved in a crime and I didn’t want the police to find it and $20 moves it into your vehicle storage lot, why wouldn’t I do that and take the plates off?

The reason for my recommendations of understanding requiring title, registration and insurance is as much to protect you from having a vehicle dumped on you as anything else. However, if a tenant should go into default, these are basic items you need to have in place to make sure you are not left holding a car that is more expensive to have removed from the lot than what is owed to you in rent. You can send your questions, comments, or suggestions for future topics to Jeffrey Greenberger at info@selfstoragelegal.com or mail them to Jeffrey Greenberger c/o Katz Greenberger & Norton LLP, 105 E. Fourth Street, Suite 400, Cincinnati, Ohio 45202 or you can reach Mr. Greenberger at (513) 721-5151, or visit his website at www.selfstoragelegal.com.