Cannabis Retailers Want Manufacturers to Cover them from Liability through Insurance
Cannabis stores may not realize most carriers are saying no coverage for vape pen batteries
The latest insurance trend in the cannabis industry has to do with cannabis stores requiring their manufacturers to include them as additional insureds for product liability. Additional insured means the store is listed on the policy for liability protection. Even more interesting for insurance geeks are stores are asking the batteries for vape pens must be covered.
A typical scenario is the manufacturer of the vape pen and battery sells these products to a variety of retail cannabis stores. A store requests their business must be covered on the manufacturers insurance policy for product liability. The evidence comes in the form of a Certificate of Insurance without any real verification the batteries are indeed covered on the manufacturers policy.
Why are cannabis retailers requesting this type of coverage for batteries?
We don’t see any evidence of retailers or manufacturers considering this type of obligation in their relationships or contracts. It may be the cannabis insurance companies forcing their store clients to request the coverage from the manufacturer as a condition of their insurance. This is a method we strongly are against for a variety of reasons, if its true.
For example, a cannabis store is buying product liability insurance from an agent. The agents tells the cannabis store they must be added as additional insured on the manufacturers policy or else they may not be able to buy insurance according to the carrier’s underwriter.
The other scenario could be some cannabis store became concerned with exploding batteries and decided to request coverage from their manufacturers in case something went wrong.
The truth is cannabis insurance companies are not covering most batteries
Based on current market conditions certain product liability insurance policies are covering the vape pens. However, they seem to be running away from batteries.
We reviewed several product liability insurance policies to determine if batteries are being covered.
Here’s what we discovered:
No Coverage of Batteries on Insurance Policies
|Cannabis Insurance Carrier A||Cannabis Insurance Carrier B||Cannabis Insurance Carrier C|
This insurance does not apply to "bodily injury", "property damage", or "personal and advertising" arising out of batteries. This exclusion applies regardless of whether:
A. Said batteries were manufactured, sold, handled, distributed or disposed of by your or others trading under your name or on your behalf; or
b. "Your work" or
|VAPORIZING EQUIPMENT AND COMPONENTS EXCLUSION |
In consideration of the premium charged for the policy, it is hereby understood and agreed that coverage under this policy does not apply to any claim arising out of the use, handling or ownership of vaporizing equipment, or any part of the accessories attached or used with the vaporizing equipment including pens, cartridges, mouth pieces, batteries, chargers, coils and any miscellaneous products used with, or attached to, vaporizing equipment.
|DESIGNATED PRODUCTS EXCLUSION--PRODUCT RELATED TO ELECTRONIC CIGARETTES, VAPORIZERS AND SIMILAR DEVICES.|
Batteries manufactured, distributed or sold by, or disposed of by, or in any way used or handled by, or sold under the label of :
a. ShenZhen Fest Technology, Co., Ltd
b. ShenZhen E-Young Technology Co., Ltd
d. ShenZhen Mxjo Technology Co., Ltd
f. MXJO Tech
In our table, Carrier B is excluding batteries and vape pens from coverage. Carrier C has a list of batteries they believe are the most dangerous.
If you’re a store requesting this coverage from your infused product manufacturer it would be prudent to be certain its even offered. More importantly, cannabis retailers through their agents may want to question the insurance company if this is indeed a requirement of buying and maintaining insurance.