Top Cannabis Insurance Coverages You Didn’t Know You Needed
Cannabis companies, like businesses operating in any other industry, need to have insurance policies capable of truly covering them against potential real world threats. You may think all policies are the same, but they are not. And choosing the wrong coverage can prevent you from bouncing back when something happens. How can you be sure you are getting the coverage you need? Here are three overlooked insurance coverages you will want to add to protect your cannabis business.
Product Liability Insurance
Most cannabis cultivators and manufacturers are quick to take steps to protect their inventory from loss or damage and secure their bottom line if anything happens. But what do you do if it is your products that cause harm to consumers?
Product liability coverage protects your business in the event of product failure, contamination, and more that lead to adverse effects. These policies will often protect your business from two types of claims.
First-party claims are made by those affected directly by your product. These claims can result from improper labeling, failure to warn of potential hazards, and even the presence of mold or toxic solvents.
Third-party claims apply to damage caused by someone while they are using your product. This could include negligence on the job, accidents while driving, etc. when linked to impairment from cannabis products.
While you might think that you only need product liability coverage if your business is growing or producing cannabis products, nearly every level of the cannabis supply chain can potentially be held liable for damages due to products they create, transport, or sell.
Cannabis cultivators, especially those who are making the transition from a loosely regulated medical market to legal recreational markets, often neglect the need to protect their most important asset, the cannabis plant itself. Insurance policies can cover your crop from seed or clone all the way to its harvested flower and retail-ready stock.
No matter what size operation you have, insuring it will protect your bottom line and help guarantee you are able to reestablish your farm when you face losses to potential revenue. Policies may be written to protect your crop from water damage, fire and smoke, theft, and more. Talk to your insurance broker to see how you can protect the value of your cannabis plants.
Motor Truck Cargo Insurance
If your business will be transporting property in any way, then Motor Truck Cargo coverage is a must. Motor Truck Cargo policies cover your property specifically when it is traveling in your own vehicles. This could be cash, finished products, equipment, and other cargo. Some policies also allow you to cover the property of third party entities within your vehicles as well.
You don’t need to be strictly a transportation company to obtain this type of coverage. Many different classifications, including cultivators, processors and manufacturers, distributors, and retailers, all can (and should) secure this type of coverage for their business to protect assets when in transit.
Finding Coverage You Can Trust
There are important differences between available insurance policies for cannabis businesses, including variations in the exclusions, limitations, and endorsements of each individual policy, so it can be difficult to know exactly what kind of coverage you need.
Regardless of the type of policy you choose for your cannabis business, it is important to find cannabis industry insurance partners you can trust to help you cover your business against real world risks. You also want a partner who offers comprehensive coverage that will be able to offer detailed explanations of the different types of coverage available for your business classification, so you are supported when the unexpected strikes.
Charles Pyfrom, CMO of CannGen Insurance Services, is an insurance industry veteran with more than 14 years of experience. He has been a member of the executive team since 2017 and is tasked with oversight of all carrier/broker relations, program development/direction, as well as long-term underwriting strategy. Prior to joining CannGen, he spent five years as Vice President of Program Management at a privately held program carrier overseeing nearly $300m in annualized Gross Written Premium and spent four years with Farmers Insurance Group in management roles at their home office. He holds a B.S. in Business Administration/Finance from California Lutheran University and an MBA from the Graziadio School of Business & Management at Pepperdine University.
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