About 15 years ago, one Insurance company figured out that if there was a way to include the coverage with the tenants’ rent, the process would be far more convenient. And when commission was offered to the storage operator, a huge market was developed. The idea was successful from the start. Owners were much more interested when they shared in the sales revenue of the product, and some of the smarter ones even compensated their mangers so they also became more involved in the sales effort.

But as sales climbed, State Insurance Departments started to notice. They quickly discovered an insurance product was being sold in their states by people who were not licensed insurance producers and therefore in violation of State insurance regulations. They also discovered the high commissions (called administrative fees) that owners were making and started cracking down on the way the product was sold and how commissions were being illegally paid to unlicensed producers.

Storage owners didn’t know that they needed licenses to sell tenant insurance so they treated it just like the sale of anything else. They also raised and lowered the price of the insurance without notifying their State Insurance Department…which was another violation.