Insurance is a complicated subject, add to that the evolving nature of the cannabis industry, and you have a combination that can make life very difficult for business owners in this space. Understanding the different coverages available, how they fit into your operation, and what protections they provide is extremely important. The Cannabis industry has the potential for high rewards but like anything there is also a lot of potential for risk, including:
Reading and understanding insurance policies can be challenging. Depending on the quoted coverage, scope of coverage, common conditions and exclusions, most insurance contracts for cannabis operations are north of a hundred pages!
No matter the nature of your operations or its requirements for insurance, here are some basic insurance coverages for a cannabis business to keep in mind as you figure out the organization’s needs:
This coverage protects your business assets from third-party claims that involve injury or property damage while on your property. Commonly referred to as “Slip, Trip and Fall Coverage” this is an essential policy that all businesses should have. This is also a required coverage if you are leasing a commercial property or contracting with third parties.
This coverage protects you and your business if you are found liable for bodily or property damage to a third-party that arise from defective products that you sold, manufactured, or distributed. This coverage can also help you pay for damages if you or your business is found to have failed to inform, instruct, demonstrate or have provided inadequate warning on any of the products that you have sold, manufactured or distributed.
This policy makes sure that you have coverage should your property be damaged by fire, theft, and/or natural disasters. Properties can include buildings, inventory, equipment, and items that are being used in your cannabis business’ daily operations. A key insurance coverage to protect expensive equipment and help mitigate the loss of income.
Business income insurance provides coverage on any incidents or natural disasters that may cause your cannabis business to stop operations. This insurance coverage can replace lost income or revenue while your business is recovering from the damage that was directly caused by the covered peril.
Often called “Workers’ comp”, this insurance coverage protects employers from liability if any of your employees are injured in the workplace. Providing the injured employee lost wages, medical bills, and other expenses if they are injured while on the job. This will limit the probability of you getting sued in cases of work-related injuries or illnesses.
This policy is specifically designed to insure your vehicle (or fleet of vehicles) used to operate your cannabis business. Depending on the coverage selected, you can cover damages to your vehicles, injuries sustained by your employees/drivers and to any third-party property damage/injuries you are liable for after an accident.
If you grow Cannabis, this insurance coverage will protect your crop against fire, theft, vandalism, and other hazards throughout the growing cycle. This would ensure you are compensated for the value of the plant regardless of which stage you are in. Protection can be placed on seeds, clones, and plants in veg, bloom or days from harvest.
For companies that deliver or transport products such as clones, finished stock or even cash, this policy will cover the shipment while it’s being transported from point A to point B. Theft, vandalism or damage by fire are the most common occurrences which this coverage is intended to protect against.
The cost of insuring your cannabis business depends on the complexity and size of the cannabis operation.
Each cannabis business’ insurance needs vary, you may need one or multiple policies. For example, product coverage, commercial property, and/or business liability. A Vertically Integrated (from seed to sale operation) cannabis operation may consider adding riders for crop cultivation, laboratory insurance, commercial vehicle policy and much more. All off these factors affect the price of insuring your cannabis business.
There are multiple things to keep in mind when searching for an insurance agent to help protect your business, here are some to consider:
Your insurance agent should be working with different carriers to find the best coverage for you. Check to see who they are recommending and what carriers they work with. If the insurance carriers they recommend do not have an “A” or “A+” rating, you might want to consider an alternative agent with better resources.
Look for insurance agents that serve a broad range of cannabis businesses and have a proven, solid track record for selling cannabis coverages. There are chances that agents who are new or inexperienced will have limited knowledge about cannabis insurance, including the coverage necessary for various verticals.
It is always about you and your business and it does not matter if you are a start up or an established cannabis brand. If you are having trouble finding the right insurance coverage, understanding the coverages that are being presented to you, or simply want another option, Cover Cannabis is here to help you. We can offer you a free quote, and help get your business insured.