10 Questions or Factors to Consider when Buying Marijuana Insurance

Different Scenarios to Contemplate when Purchasing Coverage for your Business

The typical process of buying insurance involve the following steps:Marijuana Store

  1. Contacting a retail insurance broker 
  2. Completing a insurance application
  3. Review the insurance quote, coverages, and policy forms
  4. Signing the application and paying for the insurance
  5. Receiving and reviewing the insurance binder
  6. Receiving and reviewing the insurance policy

Below are tips based on our experience for licensees contemplating their insurance, insurance coverages, and particular risks with their operation. 

This list may be altered depending on if your business is retail, cultivation, or a infused products manufacturer as each operation will have risks unique to them.

  1. Think about the risks you want to insure or not insure.  If you’re not going to insure those risks, then figure out if you can control or manage the risk.  A good example is not buying cannabis insurance protection because you have a steel vault.
  2. Your lease agreement or other contracts will determine if you have insurance obligations to meet.  Read those obligations carefully and discuss with your insurance agent. 
  3. Does your state or local jurisdiction require you to purchase a certain type of insurance coverage?  You’ll want to be certain you’re meeting those obligations because your license depends on it. 
  4. Workers compensation insurance is required by law throughout the United States.   If you have employees, you’ll need insurance to cover them if they become injured on the job.
  5. Think about what insurance products you need.  At a minimum, a commercial general liability insurance policy is required if you’ve leased space for the business.  Do you want or need product liability?  Do you want to cover your cannabis or crop?  The answers to these questions will depend on price, concern for risk, and other variables such as peace of mind.
  6. Your insurance needs will be different if you have construction.  Why?  The risk is different hen you’re under construction as opposed to being operational.  Depending on the amount of construction, the insurance carriers are likely to frown on issuing a insurance policy if they discover a substantial level of construction activity.  You will need different insurance policies to cover this type of risk.
  7. Don’t wait until the last minute to buy insurance.  Shop around among a variety of insurance brokers to make sure its the right fit with both parties. 
  8. Be certain the insurance broker sends you the entire quote and policy documents.  You want to be certain an exclusion of coverage wasn’t intentionally removed.
  9. Don’t sign the insurance application unless you’re certain the answers are correct.
  10. Determine how long the insurance broker and carrier has been serving the cannabis industry.  Many insurance companies enthusiastically enter and then exit the industry.  A inexperienced insurance broker can lead to problems during a claim and even litigation.   The truth is not all underwriters from surplus lines brokers are professional and honest with their business dealings and representations they make on behalf of their insurance carriers.