The self-storage insurance pitfall that can cost you £2,000 a year

Self-storage users are paying as much as nine times more for their insurance than they need to – as experts warn that customers are getting ripped off by hundreds of pounds a year in excessively high premiums.

There has been a boom in demand for self-storage units – with the number of sites offering the service up 16 per cent to 2,200 since 2020.

Contents insurance is not typically sold as part of the rental agreement but is usually promoted separately by the company as a valuable add-on you should take out.

New research by the insurance broker Surewise has found customers have been quoted £108 for six months of £1,000-worth of cover by self-storage providers when similar policies from competitors were available for as little as £11 for the same period.

It also found you can spend £2,000 more than is necessary on cover for a year by taking a deal offered by a self-storage firm rather than looking elsewhere.

For example, it found a self-storage unit in London was quoting £1,159 to insure £27,000 of goods for six months – £193 a month. But by looking at other deals, cover for six months could be found for £146.

Richard Hannan, chief executive of Surewise, says: ‘Customers are very likely to overpay.

But there is no obligation to take out insurance through a self-storage company. There is nothing to stop you shopping around.’

Major providers often use their own brands to promote insurance provided by a third-party insurer, in a process known as white labelling.

For example, leading provider Big Yellow uses Axa Insurance to sell cover under the self-storage company’s brand, while Safestore uses Basil Fry & Company.

Jeff Salmon, founder of insurance claims management company Salmon Assessors, fears many people may feel tricked into taking out self-storage branded cover because they are not aware other options are available – and are less likely to question an offer if they sign up for renting storage space at the same time.

He says: ‘It can be an expensive mistake just signing along the dotted line. You should never sign up with the cover offered by a self-storage company without taking a deep breath and then looking around for other options.

‘If you are only using storage on a temporary basis – such as three months – you might even discover you are already covered by your existing home contents insurance provider.’

Salmon suggests that for long-term storage rentals an online broker service should be able to save you hundreds of pounds over a year.

Specialists that can help with self-storage insurance cover include Surewise, Store Insure and Store And Insure.

But Salmon warns the cheapest deal is rarely the best option. He says: ‘Few people read the small print of their policies until it is far too late, and they are making a claim.

‘Make sure you check on the excess amount, as if a policy does not kick in until £1,000 you could be left out of pocket.

'But it is a false economy to try and save money by not taking out cover because if there is a disaster, such as a fire, it is vitally important your valuables are covered.’

You also need to check the storage company rules because if you break them then any claim could also be thrown out – no matter who is offering the cover.

Insurance is typically sold separately, and it is not included in the cost of self-storage – although it is usually mentioned when customers are signing up to rent a unit.

Surewise, which did a mystery shop of 135 self-storage sites in Britain to find out the insurance prices that they offer, points out that despite companies actively promoting their own insurance policies – and not mentioning other options – the self-storage providers are obliged to accept insurance certificates offered by competitors.

However, they do not need to provide details of any commission received for promoting linked insurers.

Rennie Schafer, chief executive of the trade body Self-Storage Association UK, says: ‘It is a free market, and we just want to keep people informed.

'We strongly encourage all customers to take out insurance and our members offer realistic quotes that are competitively priced.

'It may be the case you can sometimes get cheaper third-party insurance elsewhere, but it is important to check the cover details and make sure it includes similar specifics, such as cover for flooding.

‘By dealing with a self-storage company’s own insurer, you may find the process runs more smoothly if there is ever a claim as you are dealing directly with one provider.’

A spokesman for Safestore says: ‘Our cover goes beyond typical home policies, offering broader protection against more risks and ensuring customers get the peace of mind they deserve.

'While taking cover through Safestore isn’t compulsory, it is a more efficient and cost-effective choice. Most customers opt for our policy at the point of sale, saving time and avoiding the hassle of arranging their own. ’

Big Yellow says: ‘All customers must either take out contents protection for their goods through our enhanced liability service or provide proof of insurance cover for goods in self-storage before they can store with us.

'If using your own insurance provider you will need to ask them to add an addendum to your policy to include the name and address of the store.’

Shurgard, which took over the Lok’nStore brand a year ago but is still running its outlets, was contacted for comment.