Cannabis Property Insurance – Is It Worth It?

Did you know that Cannabis-related business have very little to no options when it comes to insure their property? And it is mostly due to the high risks that is often most prevalent in the Cannabis-related business, with a hardening property insurance market sealing the deal.

Yes, that’s true.

Hard that may be to believe, but it’s true that for Cannabis-related business, insuring property coverage can be twice the cost as compared to what the manufacturing and retail outlets of traditional business have to pay.

The reason – you guessed it – there are many unpredictable hazards that come in association with the manufacturing and selling of Cannabis.

For building owners and landlords, it’s pretty much the same condition – they have to think twice about taking in a tenant that deals in Cannabis. Many underwriters hesitates to offer insurance due to manufacturing risks and high theft, and this, in turn, will be a failure for the landlord – the simple reason being that if they disclose a Cannabis tenant, it’s most likely to result in a denied claim.

Moreover, there are many building owners and landlords who will ask the Cannabis-related business to maintain occurrence-based liability coverage – the issue with this is that it is very hard to secure for a Cannabis-related business. Occurrence-based liability coverage covers the renter in case of an accident, regardless of whether a claim has been made, should the accident occur during the policy period.

On the other hand, there are many insurance companies that will only cover the high risks of a Cannabis-related business with a claims-made policy – or it can also be a one in which the claims must be made only during the policy period. The building owners and landlords take advantage of this fact by stipulating their requirement for an occurrence-based policy in their lease. This, however, comes at a disadvantage for the Cannabis-related businesses with a claims-made policy, as they could unknowingly violate their lease.

These issues have led the building owners and landlords to charge premium rent as per their wish from Cannabis-related business owners who finds it hard to obtain the right Cannabis property insurance.

To best deal with these issues, it’s recommended that both the parties – the building owners and lords and the Cannabis-related business owners should give the following risk management considerations a try.

Carriers will readily provide a policy to the Cannabis-related business owners to do what they do best by minimizing their risks. There are ways on how Cannabis-related business owners can reduce their costs, minimize exclusions and get broader property coverage.

  • A plan should be made in advance so as to prevent or respond in case of a robbery.
  • Having proper knowledge is a must on how to use safes and vaults properly. Cameras, central station alarms and other safe methods need to be considered, and tied to phone to be accessed easily.
  • Fire sprinklers needs to be installed and tested regularly to make sure that they are in good working condition; this should be based on the operations of Cannabis-related business.
  • If possible, a third party should be considered which is insured properly. They must be armed with the necessities to guard the storefront regularly.

To control risk, management of risk is vital, and it is the insurance considerations that can help the Cannabis-related business owners to obtain the right Cannabis property insurance while reducing exaggerated costs.

  • If you are a building owner or a landlord, and who is well on your way to get a Cannabis tenant, it’s best to have a talk with your insurance carrier, at least 30 days before the lease begins. Take note – even if you talk it out with your insurance carrier, they will issue a notice of cancellation, as they won’t want to involve with the risks that are associated with Cannabis. Even if you don’t disclose your new Cannabis tenant, a claim could be denied despite it being filed and the non-disclosure policy will cost you.
  • The Cannabis industry despite being profitable, it’s highly volatile. As such, it’s important to work with an agent or broker who knows how the industry operates – they are the ones who specialize in Cannabis. This will help to remove any hidden exclusions and it will aid in procuring the best insurance policy for the Cannabis-related business.

Today, the Cannabis industry is growing fast and though, it has led to a host of new challenges; however, with the right Cannabis property insurance, most of the risks that follows Cannabis-related business can be minimized, propelling the Cannabis-related business to a bright future.

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