PROTECT Your Storage Business from Skyrocketing Insurance Costs

Is self-storage insurance breaking the bank? 

Scott Meyers welcomes back industry expert Terry Campbell for a record-breaking third time. 

After a brief "retirement," Terry has reentered the industry, this time leading the self-storage vertical at Johnson Insurance. 

Together, Scott and Terry unpack the rising costs of insurance, the impact of natural disasters on premiums, and strategies for self-storage investors to protect their assets without overpaying. 

They discuss how savvy operators can adapt to the shifting landscape, the importance of proper underwriting, and the potential opportunities that arise as market conditions squeeze out weaker players. 

WHAT TO LISTEN FOR

04:01 – Why Insurance Costs Are Skyrocketing (And How It Affects You)

10:43 – How to Accurately Underwrite Insurance Costs

14:04 – How Insurance Costs Can Impact Property Valuations and Deals

19:17 – Terry’s 2025 Game Plan for His Own Self-Storage Portfolio

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GUEST: TERRY CAMPBELL

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Chapters

• 4:20 Why Insurance Costs Are Skyrocketing (And How It Affects You)
• 11:02 How to Accurately Underwrite Insurance Costs
• 14:23 How Insurance Costs Can Impact Property Valuations and Deals
• 19:36 Terry’s 2025 Game Plan for His Own Self-Storage Portfolio

Transcript

Announcer (00:03):

This is the Self Storage Podcast with the original Self storage expert, Scott Meyers.

Scott Meyers (00:11):

Hello everyone and welcome back to the Self Storage Podcast. I'm your host of Scott Meyers, and in today's episode we have a returning guest, a third time returning guest. I think it is a record at Mr. Terry Campbell. Terry, welcome to the show.

Terry Campbell (00:24):

Thanks, Scott. I appreciate it. I like doing the hat trick here. That's great. I appreciate the opportunity. It's always great.

Scott Meyers (00:33):

Well, I was sad to think that after two, that this wasn't going to happen again after you retired, but also probably to nobody's surprise in the industry after spending so much time on the manufacturing side of self storage and then the lending side that you wouldn't be able to stay retired, let alone auto self storage. And so lo and behold, you found a new home. So since you retired, tell us what you've been doing to now land in a different place, because again, we knew that you couldn't stay out of the storage business. How did you get to where you are now?

Terry Campbell (01:03):

Well, when I retired, in fact when we're recording this, it was actually a year ago, last Friday, just barely a year ago when I quote retired, which has turned out to be a sabbatical. And after several months of just doing all sorts of things, I had a huge list. I got rid of all of it, worked through it, worked through my wife's list, my kids' list, and I told my wife, I said, I'm going to have to go back to work and get some rest. This retirement stuff is killing me. So there's an insurance agency, obviously Johnson Insurance, they're an agency in my hometown where my wife and I grew up in Knoxville, North Carolina. It's 110 years old. And those folks had been wanting to get into the self storage insurance business. So they reached out to me last spring, early last summer and just said, Hey, can we pick your brain?

(01:52):

We'd like to ask some questions. We're wanting to really wanting to focus on trying to get into this business. And so I met with them and we chatted and we did that a couple times. And basically they convinced me to Unretire and come and help build a vertical there, sort of like I did when I was at live at bank for lending specifically to sell storage. So that's kind of how I ended up where I'm at. And I've spent time in manufacturing and lending operations and management. So the way I look at it, I'm rounding out my experience in the industry.

Scott Meyers (02:27):

You pretty much hit all four food groups now on the insurance side. So tell me, are you going then back to some of the companies that you were working with or that we've been working with in the industry and now bringing them into this agency with just kind of rekindling those relationships and then making that handshake? Is that the idea?

Terry Campbell (02:45):

Yes. I'm definitely going back to all the relationships that I've built over the years, past referral sources, past customers, just friends in the industry and working with new folks coming into the industry as well. Just the whole gamut. And it kind of helps that I can see things through a different lens than just an agency, the building side, the finance side, the operation side, and I'm still an investor in 11 locations, so I've got a lot of perspective on it that can be helpful

Scott Meyers (03:15):

Sometimes. Sure. Well, let's dive in because there's folks that have a lot of questions about the insurance industry right now, and we have seen lots of advances in self storage and lots of changes, and some of them haven't all been positive. And one of those is the dollar amount that we're seeing attributed to insurance and covering our projects right now. And there's lots of discussions on ways to be able to reduce as much as possible or how do we handle this when it comes up in terms of our acquisitions, as we've seen some pretty hefty increases due to the natural disasters and other things that we're seeing. So I mean there's a lot to unpack. Let's just begin to chat about it. Where is it the state of the insurance industry as it pertains to self storage right now from your vantage point?

Terry Campbell (04:01):

Well, as you said, the cost have gone up so much in the last two to three years, and people, I think they get it. I think they understand why you've had all of these catastrophic events and just inflation, the cost of everything is so much higher. So the insurance company, much like banking is regulated by the government, they've got to keep so much in cash reserves, just like banking. And they were really beginning to get depleted because of all these catastrophic events, which just over the last three years have just continued to get worse and worse. And we saw the things that happened last year between hurricanes and fires and then now in January, all these just unbelievable fires that they're having in California. So all these things have really contributed to the depletion of the cash reserves. So the only way to build those back up are through increased premiums.

(04:58):

So that's why the rates have gone up so much. There was some hope that this year things would be leveling off. We're starting to see a little evidence of that. I had actually just read an article a couple of weeks ago about that, but that was before what's going on now and nobody knows how it's going to be affected. What's it going to do to premiums? Are they going to start going up again? What is going to happen? Nobody really knows. So that's going to have to be sorted through. And something you just mentioned is how do you save money? How can you try to get those premiums a little more manageable? The first thing that folks go to is you raise your deductible. There are folks out there that a large deductible is $5,000. And then you've got groups out there, folks like yourselves who have huge portfolios.

(05:52):

Sometimes they're able to have a little more risk with that and they much bigger deductible. So that's one of the first things that you can do is look at your deductible and what's your risk tolerance altogether. Some of the risk management things you can do, make sure that your facilities are in good shape, that if you're in an area that has snow and ice and things like that, make sure that where people will be coming in and out, that you've got it safe. If there's ice and snow, keep it cleaned off, keep the ice melted, do everything you can to prevent what they call slip and fall accidents. And then maintenance in general. I have actually seen a rollout door that when the door was rolled up, it jumped the stop and came back around and hit the person on the head. So that was a maintenance issue and it just never was addressed. So maintaining your facility as much as you can. You also just mentioned being self-insured. Sometimes what we're finding sometimes these days is people are self-insured and they don't know it because they just haven't kept up with the prices

(07:05):

That are out there. They've added a building. They didn't tell their agent that, Hey, we've increased the size of our facility, but these are some of the things just self-insured, if you can stand it. The younger or the folks that are early in their careers and owning self storage or investing in self storage, they don't have usually the ability to self-insure very much. They need all the coverages that they can get because the least little thing could potentially put 'em out of business. But as you grow as equity, as you get bigger and you learn more things, you may be able to do some self-insuring. And we've spoken with some folks, there's one customer I'm thinking of off the top of my head who wants to, they don't want insurance. I mean, they're like, we don't want it. They don't like it. They don't believe in it. And it's like, look, if you don't want to insure your buildings, we get it. If you've got enough money to cover it. And that's the thing, if it's the property, you can have a very good idea of what it would actually cost you, what it could cost you out of pocket. If you want to do that, fine. But I'll never recommend to somebody that they go without liability because you have no idea. You have no idea what that could end up costing you at some point it could ruin you

(08:30):

Because there's so many frivolous lawsuits. That's another reason insurance is so high. It's not just the cost of things. There's so many lawsuits. This country is so litigious and a lot of these lawsuits should never even be there in the first, so exist in the first place. But it happens. It happens.

Scott Meyers (08:48):

Well, so we understand and know the reasons why Anybody that's dug into this and is bothered to ask the question why their insurance went up by double digit percentages is because of the natural disasters. And you mentioned a couple of ways to be able to mitigate that. And so understanding the relationship that you have, and we've had the benefit of working with you and been able to recalibrate and look across our portfolio to first and foremost make sure that we're covered and everything is up to date as you just mentioned, because there's nothing worse than being taken out in your business because you were underinsured, because you just didn't update or do the basic blocking and tackling, in my opinion as you just mentioned. But then to reduce that overall. But what does this look like going forward so that we can prepare for the underwriting?

(09:35):

I mean, we've been surprised over the years in the past 20 years that I've been doing this, when property taxes go up, we're not surprised any longer because we account for it. But now we're putting insurance in that category to state that we would receive a quote in the past and we know it may go up a little bit with an update or sometimes go down because of our relationships and our economies of scale with the policies that we have in place on our properties. But now from an underwriter perspective, what kind of advice would you give to a financial analyst or the lead acquisitions specialist that is looking to underwrite a new facility from where their insurance is now going forward?

Terry Campbell (10:14):

That's the tricky question. I wish I had my crystal ball here. I'd pull it out for you. But that's definitely been an issue. Hopefully it won't be nearly as much of an issue as it was before because I've seen situations that we've encountered ourself where we saw where the existing customer, this is what they were paying. So we doubled it and then it ended up being triple that amount. Now, that was in the last couple of years. But right now,

(10:43):

I think if there's a couple ways you can approach this, depends on who you are. And some people may not like this approach, but get a quote and then pad it by a certain percentage or you make your offer based on the fact, Hey, I underwrote it with this cost in place and if it goes above that, we need to talk about re-trading the price on it. Because as an investor and the seller has to understand that because they're having to deal with this too. It's like this is why we're underwriting it to now here's an unknown until basically we're ready, almost ready to close, we won't know.

(11:23):

So that's an option that some people talk about doing. But you're right, it's extremely hard to do that. And another thing that I didn't mention a minute ago that is very important is that you work with an independent agent that has access to a lot of carriers. There are carriers coming into this market, there are carriers going out of this market. There's a couple that I've heard of recently that have been around a while. They're actually exiting the market and we've seen some, we've actually worked with one in particular that is new coming into the market. So working with an independent agency that has access to all these carriers so they can go out and negotiate on your behalf and work with you. And one of the things that sometimes folks think that is beneficial is to have two agencies button heads. It's not. And the reason I say it's not is because let's say that if I and another agency are working competing against each other, I'm going to go as fast as I can to these carriers. They're going to go as fast as they can and we'll get to some first, they'll get to some first. The thing is, is once an agency gets a quote, no other agency can get that quote. Only the agency that got to them first can get it. So

(12:38):

What that does is take away some negotiating leverage. So if I am representing you and I'm going to all the carriers, then as I get those quotes in, I can go back to the different carriers and maybe put a little leverage in there and try to get you a better price where I can't do that if there's two brokers and now we don't, either one of us hold leverage over the carriers if you want to call it that. I mean, it's just basic negotiation, but we're doing it on your behalf. So we're working with an agency that understands self storage and knows how to do that, has access to the market is another way to help save money.

Scott Meyers (13:14):

Well, so as you just mentioned, it is that dance, and it is the conversation that we've had to have with sellers in the past to show them, Hey, here's where the property taxes are going and congratulations. You've got away with not paying and having this additional cashflow and not paying the increase in property taxes. It's only triggered upon a sale. It is that same conversation with insurance if we're heading into an environment in which it's going to go up, so congratulations, you didn't get this increase. You would've if you'd have kept it or here's where we're at right now. So just understand that Now we would always leverage the bank as you know all too well to say, well, now the debt service coverage ratio is less and this falls out of the bank's parameters. And so we have to get back in line and the only way to get back in line is to lower the price to lower the sales price so that it'll appraise well and the bank will lend well.

(14:04):

And so we're having to do this in that instance as well. But all that being said, we could talk about strategies and tips and ways to reduce it. And we've already done that. There's not a ton. Obviously, shop around, make sure that you're covered, reduce unnecessary, but certainly don't cut out anything that is risky. And the self-insurance piece is not for the faint of heart and nothing that we're going to recommend on this podcast. But behind all of these challenges is usually a silver lining. So typically when business gets difficult, it's when most of the folks that don't have tools and resources or knowledge or wisdom get out. And that means that there's usually a bigger opportunity for the rest of us that have been around for a while. So what does that look like, Terry, as we head into this environment in which the cost is going up for certain parts of the business, where do you see as the opportunity right now to be able to seize upon that where insurance costs and others are going up? How do we win in this game given that environment?

Terry Campbell (15:03):

You make a very good point that a lot of folks are just not going to be able to either get in or stay in because either they don't have the resources or they don't have the stomach for it. Because it used to be that payroll and property taxes were your two biggest expenses. A lot of times now it is insurance. And the thing is we just don't know what the cap is. Everybody still keeps saying we're very close to being leveled off. But again, is that true? And it kind of lags too. So if we were about to level off this year, will we level off for a while? But last year's events hit us the following year. So it is so hard to be able to try to identify that.

Scott Meyers (15:55):

So what are, I mean outside of self storage owners or really our society finally standing up and say, can we have some changes to the laws with regards to what can be brought forth in terms of a lawsuit? I mean, that is such a cost on society that is ridiculous that we don't have or that you don't see in other countries except here. We know that there's not going to be any reform on that end. But what, are there other things that you see that owners can do to perhaps change the environment of the landscape? Any lobbying that can be done with the self-storage association or things done at the ISS level or anything that you see that is an industry that we could ban together to make a difference somehow?

Terry Campbell (16:36):

I mean, it would be great if there was a way to do that. I think it's going to take a national type. I think it's going to have to be a huge movement of some sort, because so many of the people who make the laws in the legislation, they're attorneys, they have, how many of our senators are attorneys? They have legal firms. So it's going to be hard. I think. I wish there was a way to do it. I hope there's a way to do it. I think that we should definitely be looking into it because like you said, so many of these lawsuits are just

Scott Meyers (17:10):

Frivolous

Terry Campbell (17:11):

Nonsense. And no matter, I mean how many times your agreement, your rental agreement you have with people says, we're not responsible for your stuff and you're not supposed to put more than $5,000 in there, thousand. And then suddenly something's happened and they've got, oh, we had $30,000 worth of stut in there. We're going to sue you and the attorneys start calling or there's going to be punitive damages. Their dad's ashes were in there. This is just totally unreplaceable.

Scott Meyers (17:41):

And

Terry Campbell (17:41):

Those sort of things are getting out of hand too. That's something I noticed when I was at Copper is we kept getting these issues like that. If there was maybe a unit that got cleaned out because nobody was communicating, and then finally we got rid of it, and it seems like the day after we get rid of it. I mean, you could hold that unit for six months trying to reach the person, never hear back from 'em, and then the day after you take it to the dump, they show up and where's my stuff? Well,

(18:12):

Okay,

(18:14):

Here's where it's at. It's in the dump. And you never responded to any of these emails, these phone calls or anything. Well, I don't care. All my stuff was in there. I'm going to sue. You just saw more and more of that. And the other thing that you would see is that the people doing it, and I'm assuming it was based on legal advice, is that they know that you're not going to spend $10,000 on an attorney to defend a $5,000 claim. You're just going to pay 'em off to go away. So just seeing more if there's ways we could do away with stuff like that, just petty little things, but they all add up. They all just add up.

Scott Meyers (18:54):

Well, Terry, switching gears just a little bit, but you are an owner, as you mentioned, in 12 facilities still. Is that correct?

Terry Campbell (19:01):

11 locations.

Scott Meyers (19:03):

11 locations. Okay. So what does 20, 25 and beyond that look like for you holding steady? What are some of the changes that you're implementing or anything else coming down the pike that you're maybe doing in your portfolio that's been making an impact recently?

Terry Campbell (19:17):

I think, and the ones that I'm involved in, I think it's just continuing to try to tweak little things and trying to offer the best service and trying to make sure the phone is answered on the first ring and just back to the basics of the little things because until the mortgage rates go down and people start moving again, we're not going to see a whole lot of change in my

(19:37):

Opinion

(19:39):

When that happens, I think it'll cure a lot of ills. But in the meantime, you just got to, everybody's fighting over the same customers. And it makes me think back, and I know you heard this, and I think it was Buzz Victor that said it at some point, that it doesn't matter if you put cell storage in caskets are a lot alike because nobody's going to buy you the one if they don't need them. Doesn't matter how big of a sale you put on it, because if they don't need it, they're not going to rent it. That's

Scott Meyers (20:05):

Right.

Terry Campbell (20:06):

So it's just going after focusing on customer service and marketing and getting as much as you can.

Scott Meyers (20:14):

Yeah, our push this year, call it word of the year or theme of the year, is we're going to make sure that we are great operators, we've been good operators, and at the expense sometimes of a speed and the resources that we use to be able to grow, we haven't had as much of a focus on the operations. I mean, it's a static industry. We've got best business practices. We've got managers that are trained in place and third party property management companies. But now we are, as the saying goes, we're going to inspect what we expect and we're taking a deeper dive into all facets of the business again. And the goal is to become an overall, a great operator. So anybody can look at our facilities that we manage, that we have partnerships in, and they are managed very well and at the top of our game. And so that is, I believe, what it's going to take. So it's everything you just mentioned, the basic spec to the basics, and then digging a little bit further just to make sure that we are eking out every last bit of profitability, these facilities by driving down the expenses and increasing the income in any and every way possible to win in this incredible game that we call self storage.

Terry Campbell (21:19):

And I think that if we keep focusing on those things and doing those things, it's going to be like it was after the great financial crisis when things really start picking up again, we're going to be in a heck of a spot. We already exist. Our facilities are there. We got things in place and we can capitalize on that need because just like before, a lot of the new construction has been put on the shelf for a lot of reasons, and that'll give us an advantage, at least for a while.

Scott Meyers (21:44):

Yeah, agreed. Well, Terry, so good spending time with you once again, and so glad I knew that we weren't done with a Terry Campbell in the self storage industry. And glad to see you found a place and also in your hometown and working with some folks that you truly want to work with.

(21:58):

And

(22:00):

I can't say it's your last place. Well, who knows where your career will take you after that, but just glad to hear that you're home, not traveling as much and just right wherever you're supposed to be.

Terry Campbell (22:10):

Yeah, that's great. That's great. Love it.

Scott Meyers (22:13):

All right. Well, Terry, how do people find out a little bit more about you and what you're doing over there at Johnson?

Terry Campbell (22:18):

Well, they can reach out to me. My email address is Terry at Go johnson IN s.com. You can just look us up on the web. Johnson Insurance Services in Moxville, North Carolina. And I used to give out my cell phone number, but I see all people calling me from 15 years ago, so I've just been giving out my email address, and then I'll turn around and get back with them as soon as possible. But that's the best way to get ahold of me and we can talk and answer some questions and get you some quotes and whatever we need to do for you.

Scott Meyers (22:58):

Yeah. Well folks, obviously we don't have anybody on here that doesn't not only care for Storage Nation and take good care of other clients and ours as well. Terry has just gone above and beyond in every capacity that he's been in self storage, and I've been customers along the way, except in the beginning, except the very beginning on it when he was selling the pieces parts to build them. We weren't quite into development yet, but all along the way, he has served us extremely well. And that includes where he is at right now. So don't hesitate to reach out in all of his contact details will be in the bio and in the show notes. So with that, Terry, any words of wisdom that you have for folks after all your years of experience in not only business but in self storage? What type of words of advice would you have for folks as we head into this year?

Terry Campbell (23:44):

Do your work, your plan. Be patient. Don't try to get ahead of yourself. One of the turns we used to say in the banking world, don't get over your skis. Just don't pull the trigger too early. Sometimes people try to make a sale happen when it's not ready. Just be patient, work your plan, do your homework.

Scott Meyers (24:09):

Perfect wise advice, always, always homework and due diligence. So Terry, so good to be back across the table from you and I'm looking forward to being back in the same room with you again very soon in one of our masterminds are in academy.

Terry Campbell (24:21):

Same here. Looking forward to it, Scott. I appreciate it.

Scott Meyers (24:23):

Alright, thanks Terry. Take care.

Terry Campbell (24:25):

You too.

Announcer (24:28):

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