Questionable Questions Asked by Insurance Carriers
Applying for business Insurance through the use of applications produced by the insurance company is a normal business practice regardless of the industry. What isn’t normal and seemingly unique with the insurance industry are questions to cannabis applicants if they are operating illegally and conducting criminal activity.
Below are the exact questions currently used by a major insurance carrier we’ll keep anonymous at this time.
- Do you distribute your cannabis product to minors?
Answering yes would potentially mean the applicant is violating state and federal law for selling cannabis to a minor. One exception could be if the applicant is a medical marijuana licensee whose patient has a prescription from an MD who happens to be a minor.
- Do you transport or distribute your product across state lines?
Answering would be an admission the applicant is distributing cannabis across state lines would be a violation of state and federal law.
- Do you either grow marijuana on public lands or purchase any marijuana grown on public lands?
Once again, a potential violation of federal and state law by answering in the affirmative and self incrimination.
These questions became part of a supplemental application for business property. This is insurance coverage for buildings, equipment, tenant improvements, and loss of income. As if the insurance process isn’t lengthy enough, the supplemental application is four pages totaling 31 questions with a sub-set of approximately 40 more questions.
Apparently, the insurance industry has forgotten certain provisions within the US Constitution affording citizens of rights. More specifically, the Fifth and Sixth Amendment protects the rights of individuals from self incrimination and allows due process to be performed before an individual is denied their freedom.
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
Source: Cornell Law School
In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.
Source: Cornell Law School
Most people have heard to plead the fifth or being given their Miranda rights. The sixth amendment gives everyone the opportunity have their day in court.
What about other industries? Are similar questions being asked in the Pharmaceutical and Liquor Industry?
No. Not even remotely close.
We reviewed other insurance applications used for the Pharmaceutical Industry offered through CNA Insurance and Kinsale Insurance Company to determine the scope of their questions. Neither of these two applications asked questions that would place a person(s) in legal jeopardy.
How about the liquor industry?
Those Insurance applications don’t question an applicants ongoing criminal violations either. One application asked if the insured had been convicted of a felony. A conviction of a felony is different from conducting a felony.
Properly Underwrite Risk without Violating the Rights of Others
Most insurance brokers and underwriters will not object to the proper underwriting and evaluation of risk by the insurance industry before coverage is offered and purchased. This would include being in compliance with all laws.
However, it would not be appropriate and possibly illegal for insurance companies to continue with this line of questioning as a business practice. If the applicant indicates yes to providing cannabis to minors would the insurance company deny the application and notify law enforcement?
Insurance companies are not members of the law enforcement community and should leave it to the professionals.