Deaths and Respiratory Issues from Vaping Devices will cause Insurance Carriers to Contemplate Product Liability Coverage

Could the Use of Cannabis Vaping Devices be the Next Wave of Insurance Claims?

Today, the California’s Cannabis Industry Association (CCIA) issued a statement responding to recent respiratory issues caused by vaping devices.  There have been 60 reported cases in California, but no cases have been associated with products purchased from California cannabis licensees.  There has been one death in California according to SF Gate

The CCIA may be responding to a recent death that occurred in Oregon connected to a cannabis device purchased from an Oregon cannabis licensee.  The Oregon Health Authority issued a statement on September 3, 2019 indicating the following:

Investigators at the OHA Public Health Division say they received reports that the individual, who died in July, had recently used an e-cigarette or vaping device containing cannabis purchased from a cannabis dispensary.

This investigation is ongoing, but may be the first death linked to a cannabis vaping device purchased from a licensee in the history of the United States. 

Black Market THC devices

Source: New York Department of Health

The State of New York has also insured a warning to the public.  Their focus is on unregulated cannabis devices bought in New York illegally with preliminary indications of high levels of vitamin E acetate.

Laboratory test results showed very high levels of vitamin E acetate in nearly all cannabis-containing samples analyzed by the Wadsworth Center as part of this investigation. At least one vitamin E acetate containing vape product has been linked to each patient who submitted a product for testing. Vitamin E acetate is not an approved additive for New York State Medical Marijuana Program-authorized vape products and was not seen in the
nicotine-based products that were tested.

The State of New York has provided product images from black market devices that can be viewed here.

Expect Product Liability Insurance Carriers to Take Immediate Action through Policy Modifications

The cannabis insurance industry will likely evaluate the potential impact of these events on products being offered and bought by licensees.  At this stage it would appear vitamin E acetate has been isolated with illegal cannabis vaping devices. If the product purchased in Oregon has the same ingredient, then insurance carriers might not react as quickly.

The type of insurance most likely to pay for claims and lawsuits is product liability coverage.  These policies were designed to provide liability protection for cannabis products like vaping devices when they enter the stream of commerce and consumed by a third party.

If a respiratory illness or death was to occur using a cannabis vaping device, then insurance of this nature will respond to any claims or lawsuits that could arise.  These policies offer starting limits of $1,000,000 with legal defense included for bodily injury damages.  The respiratory illness or death would fall under the category of bodily injury as defined by the policy terms.  

The Oregon death related to a cannabis vaping device could trigger the few product liability carriers to immediately modify their policy terms through an exclusion to eliminate this threat or cause certain insurance carriers to exit the industry.  That exclusion may be a simple removal of vitamin E acetate also known as alpha-Tocopherol acetate or Tocopherol acetate to an outright ban on any type of vaping device.

Cannabis licensees should review their product liability insurance coverage

Determine if you have product liability insurance.  Most commercial general liability policies will remove the coverage.  The insurance term to indicate coverage is typically “Products & Completed Operations.”

If you have product liability insurance review if vape pens or vaporizing devices are excluded on your policy or included on your list of products to be covered.  This modification is most likely to show up as a separate page and might require a review from your attorney. 

A recent blog article comparing product liability insurance carriers graphically indicated four insurance companies are covering vaporizing devices. 

Below is an example from a policy indicating devices used for vaping must be covered 

Vaporing devices product liability included

Vaporizing devices has been included on the list of products being sold by this licensee

Vaporizing Devices Exclusion

Specific policy exclusion for vaporizing devices

CCIA Statement on Vape Pen Illness

Letter-to-Legislature-re_-vape-products

Oregon Public Health Statement

Oregon DPH Cannabis Vaping

New York Department of Health

NY Public Health Statement Vaping Vitamin E Warning