The legal marijuana industry has experienced accelerated growth over the last five years, with industry experts expecting more to come. Currently, medical marijuana is legal within 33 states plus Washington, D.C., and recreational marijuana usage is permitted in 11 states plus Washington, D.C.. Cannabis insurance is available to help protect those within the industry.
In spite of this growth, many insurers are unwilling to enter the cannabis insurance market due to the fact marijuana remains illegal at the federal level. This has led many insurers to offer basic policies with low limits of just $2 million in aggregate costs.
Protection Provided By Cannabis Insurance
The cannabis industry is changing and cannabis businesses should prioritize taking out protection to defend against the potential pitfalls which threaten their operations. Seeking out a cannabis insurance policy will help to grant security and peace of mind. This policy provides the following protection:
Protection from General Liabilities
General liability coverage protects a cannabis business from claims of bodily injury and property damage. It covers legal fees, ongoing medical costs and any settlements awarded. Without general liability coverage, the business would be required to cover all costs out-of-pocket, which can easily accrue to hundreds of thousands of dollars..
General liability insurance applies to anyone not working for the business, including customers and visitors. In practice, a business may experience a customer who trips and falls in one of their dispensaries. Any immediate and ongoing rehabilitation costs would be covered by the organization’s general liability policy. This would also include attorney fees and any settlements awarded to the injured party.
All cannabis insurance policies provide a set amount of general liability coverage. Industry experts recommend that businesses also take out an umbrella insurance policy, which will cover any costs that exceed general liability coverage limits.
Protection Against Burglary/Theft
Burglary and theft, either by a third-party or an employee, can cause significant disruption and loss to any business. Cannabis insurance can provide protection against burglary and theft.
In the event that such an incident occurs, a business’s cannabis insurance policy will cover the cost of the items stolen. Businesses are advised to have enough coverage for the full material value of the items used by their businesses.
Protection Against Property Damage
Any property damage incurred by growers or dispensaries can also be covered under cannabis insurance. It offers protection for both repairs and full replacement of both a primary structure and any outbuildings. Additionally, property damage protection will insure a structure’s contents, fixtures and lost inventory.
For example, if a major hydroponic system is damaged accidentally, a property damage add-on as part of a comprehensive cannabis insurance policy will cover the cost of repairing or replacing the system. Some policies may even provide payouts for any lost income caused by equipment breakdowns.
Protection Against Loss of Income
The real damage caused by accidents or disasters in a business is not confined solely to repair or replacement costs. Businesses must also account for any lost income resulting from operational disruption.
A major fire which destroys a dispensary could prevent the business from earning revenue for many months. Cannabis insurance policies offering loss of income protection can allow a business to survive by providing supplemental funding while they take action to rebuild.
Loss of income will cover any required costs a business is obligated to pay, such as ongoing payments to employees, taxes and mortgage payments. Businesses should also consider taking out a loss of income policy to cover the costs of temporarily relocating a growing operation or a dispensary in the event that the original location is temporarily unusable.
Protection Against Crime
Marijuana is a legal drug, therefore it should come as no surprise that businesses involved in cannabis production experience an elevated risk of becoming victims of crime.
Crime insurance protects businesses against a wide range of criminal acts, such as employee dishonesty, forgery, computer fraud, kidnap and funds transfer fraud. This type of protection provides compensation for any losses the business takes as a direct result of crime.
It is important to read this aspect of a marijuana insurance policy carefully to ensure it covers all possible types of crime by either employees or third parties.
Contact The Cannabis Insurance Experts At MFE
As a relatively new and often misunderstood industry, cannabis production comes with greater risks than other industries. Insurers are only just beginning to offer a wider range of insurance policies to businesses within this industry.
Businesses have complete control over the amount of coverage they require. Most professional insurers also allow a number of add-ons to be included within a standard cannabis insurance policy to provide further protection.
If you own and operate a cannabis-based business, contact the cannabis insurance experts at MFE Insurance to learn more. Reach out today by phone at 213-266-7990 to request a quote.