While cannabis insurance is becoming more widely available, common misconceptions have been keeping businesses from getting the coverage they need. Most misconceptions pertain availability and adequacy of insurance coverage.
As T.J. Frost, a United States’ cannabis segment leader, says, there’s a lot of good coverage for cannabis out there more than what business owners might believe.
Top 3 Myths Regarding Cannabis Insurance.
1 – Nobody Will Insure a Cannabis Business
Cannabis business insurance is readily available, and marijuana businesses should get the same standard of coverage as any other enterprise. Cannabis coverage ranges from product liability, EPLI and D&O policies, property, and casualty, to worker’s compensation and employee benefits.
According to Frost, cannabis cultivators are essentially like farmers, and should hence have their property insured with general liability, equipment breakdown, and product liability.
Crop insurance is also available to indoor and outdoor cultivators. While this is a line of coverage that most people don’t see value in, it protect farmers against pesticides, bacteria, mold, and fungi.
2 – Product Liability Insurance Isn’t Necessary because I’m not Selling a Finished Product
Irrespective of where a business falls in the supply chain of cannabis, HUB International maintains that product liability is the most significant risk in the cannabis industry. There’s a “trickle-down effect,” which encompasses the whole industry from production to sales and distribution, and this even involves marketing representation and labeling. All sellers should have enough product liability coverage and insurance certificates.
3 – My Landlord will Cover Losses in My Operation
Most likely, a landlord’s policy will not cover a marijuana business’ loss. Actually, a cannabis business’ loss might even lead to the nullification of a landlord’s policy for having rented out a property to such a business. With this, a landlord’s policy is not adequate, and a cannabis business will need to have its own coverage.
Frost adds that cannabis tenants should review the lease agreements carefully. This is because most lease agreements will require tenants to protect any improvements they could have implemented in the property.
Cannabis businesspersons should send their lease agreement’s insurance segments to their attorneys and insurance brokers to make sure that they are ensuring their assets properly.