SmartStop Asset Management in Ladera Ranch was fined $250,000 for offering and selling more than $2.1 million in insurance products to its self-storage renters without an insurance license, the California Department of Insurance announced Friday.
“Companies that are not properly licensed to transact insurance in California place policyholders at risk because the insurers have not met the standards required under state law,” said state Insurance Commissioner Ricardo Lara. “In this case, my department’s investigation ended this illegal activity to protect California renters throughout the state.”
SmartStop Asset Management and its affiliates, collectively SmartStop, control, manage, or contract with other entities to manage self-storage facilities that are leased to California renters.
On July 27, the department issued a cease and desist order to SmartStop, requiring the unlicensed company to immediately stop selling insurance products to its California storage unit renters. The order alleges that between October 2017 and July, SmartStop offered and sold about 19,500 insurance policies to California consumers without an insurance license from the department as required by law.
The department’s investigation discovered SmartStop charged renters more than $2.1 million for renters’ insurance, retaining more than $1.8 million as operating fees. It was not disclosed to renters that they would be paying high fees to SmartStop for insurance that actually cost far less, according to the insurance department.