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Insurance for Growers: Get Coverage for Indoor and Outdoor Operations

20 April 2020 / Category: Blog
Hand Holding Cannabis Plant - Banner Image for Insurance for Growers: Get Coverage for Indoor and Outdoor Operations Blog

If you grow or cultivate cannabis commercially, it is critical to secure the proper business insurance to protect your crops.

There are plenty of risks that can wreak havoc on business owners growing cannabis, risks such as; damage caused by electrical and flooding hazards, fire and smoke, theft and vandalism, and mechanical breakdown of equipment required to regulate the growing environment and temperature of the crop, among others.

One of the biggest challenges for cannabis business owners, is securing the proper coverage based of their type of growth operation:

I. Growing Cannabis Indoors

Growing cannabis indoors makes it easier for companies to get access to cannabis crop insurance. Since Indoor grow-ops have sustained controlled environments, the risk is lower and the insurance options increase.

There are coverages readily available to cover indoor cannabis crops for risks such as:

  1. Theft
  2. Vandalism
  3. Fire
  4. Crime or employee dishonesty
  5. Equipment breakdown causing spoilage

To help drive insurance costs down, cannabis growers should have a ready source of organizational and operational data. This data includes knowing the air temperature to humidity levels, how much nutrients plants are receiving, soil condition, sheltering and supervision details of the crop and more.

II. Growing Cannabis Outdoors

Outdoor crop coverage has been unavailable in the market until very recently, due to the lack of controls in the outdoor environment, such as:

  1. Accidental chemical exposure, like pesticides and sprays.
  2. Weather fluctuations and storms – dry spells, snowfall, windstorms and heat waves, to name a few.
  3. Theft of product, unwanted visitors and unintentional damage to the yield from the staff.
  4. Specific state regulations. For example, in California, there are very strict testing requirement for a number of pesticides, heavy metals and other factors that will deem crop non-compliant.

Over the past 6-10 months markets have emerged that are willing to insure full outdoor crop and hoop houses. The expectation is that as the industry grows and evolves, more and more insurance companies will provide some type of crop insurance. In the meantime, it is important to understand exactly what these policies are covering and if they have any exclusions before purchasing.

As for greenhouse cultivations, they have been able to secure crop insurance for a long time now, provided that property safety measures are in place such as video surveillance and sophisticated locking systems.

For those who are unable to secure crop insurance for outdoor crops, a possible option is to insure the crop once its been harvested and brought in house to a secure facility.

An experienced insurance agent should be able to walk you through the different options available for you, explain the coverages in depth and help you secure the right coverage.

How to Secure the Right Coverage

Cannabis business owners need to ask appropriate questions about crop insurance coverage, based on the type of cannabis growth they have and understand what is available, what is covered, and the requirements.

We advise asking questions regarding:

  1. What type of coverage is available for crops? Outdoor and Indoor?
  2. How are risk factors rated?
  3. How was the evaluation of risk created and how is it fair and reasonable?
  4. Is there coverage on the different plant growth stages?
  5. What is covered inside of an indoor growth facility (for example, multiple rooms, equipment)?
  6. What are the common coverage gaps and/or exclusions?
  7. What are the requirements to qualify for insurance coverage and be protected in the event of a claim?

Note that the more effort you put in mitigating risks, the greater the chances of reducing insurance premiums.

Cannabis cultivation takes a tremendous investment in infrastructure including equipment, lighting, seeds, security, and the crop growing at various stages of value, all of which can be points of vulnerability. Fortunately, the right insurance program can help protect your investment.

At Cover Cannabis we have over 10 years of experience in the Cannabis industry, dealing with all types of cannabis growers. We can walk you through the insurance process, explain the different types of crop insurance available for your business, and work with you to build a policy that works for your business.

If you need additional help or information, reach out to our team of experts. We are happy to provide you with a free insurance quote, contact us today!