The cannabis industry has grown rapidly as many states have legalized its use for medical and recreational purposes. According to Grand View Research, the global marijuana market was valued at $17.7 billion as of 2019, and indicators show that it will continue to grow over the next several years. During its rise, the industry has experienced its own set of challenges and risks. One notable obstacle has been finding the right insurance policy to ensure there are no critical gaps in coverage. Property damage liability policies should protect against those risk factors to protect a dispensary business.
What Is Covered With Property Damage Liability
It’s easy for those in this budding industry, particularly first-time owners, to miss a critical area of coverage. State and federal laws also conflict on how regulations affect cannabis and help products. That has caused many insurance carriers to shy away from providing coverage tailored to this industry, which further complicates things for a business owner. Here is a list of factors that a dispensary should consider when tailoring their property damage liability insurance coverage to their specific business.
Heat Lamps
For dispensaries that grow their own cannabis, there is a lot of essential equipment and machinery involved. Heat lamps are frequently used in indoor cannabis cultivation sites. These lamps can be very beneficial, particularly in colder climates, to use for a grow operation. However, they are also extremely hot and, if mishandled, could result in damage to the plants. Heat lamps can also increase the risk of an accidental fire when they are not properly secured and placed a safe distance away from flammable materials.
Hydroponic Operations
There are many advantages to using hydroponics over soil methods when it comes to a grow operation. It eliminates the need for soil, can provide more control over the hydration levels and operations do not have to re-pot these plants. In addition, these can yield more results, which can particularly be useful in smaller grow operations.
However, if the machinery or equipment breaks down, it will start affecting the dispensary’s bottom line immediately. Repairing or replacing equipment is expensive and frequently unexpected.
Equipment breakdown coverage can include protection for a hydroponic operation and any equipment, including computers. It provides coverage for both the repair and replacement of the equipment. If property was damaged as a result of the equipment breakdown, that may be potentially covered as well. One type of loss equipment breakdown insurance doesn’t cover is breakdown due to improper maintenance care or age.
Flooding
Mother nature doesn’t discriminate in who it affects. A natural disaster such as a flood can’t be stopped. A property insurance policy can cover damage to business-related property from natural disasters such as flooding. Buildings, structure, fixtures, inventory and computers are among the items that are generally covered under this type of policy.
Customer Altercations
It is not a rarity that a customer of any business may be dissatisfied with a product or service for whatever reason. While it is never acceptable for a customer to become destructive because of their dissatisfaction, it has unfortunately been known to occur. That’s why it is important for a cannabis business to include a policy with crime insurance. This coverage with the addition of property insurance can provide peace of mind if such a situation occurs.
Vandalism
Another type of crime that a crime insurance policy covers is vandalism. The purposeful destruction of or damage to property can not only cost money to repair or replace, but can also feel personal. Being covered in this type of situation will at least provide the peace of mind of knowing that the business won’t have to pay for any associated costs out of pocket.
Supply Line
Getting the product from a grow operation to the retail location of a dispensary is an area of concern for the cannabis industry. State distribution licensing requirements must be followed while determining how to safely transport the product to retail locations. Vehicles used for these business purposes are borrowed, hired, owned or non-owned by the business. If these vehicles are involved in an accident, responsibility falls to the business. Commercial automobile insurance will mitigate these risks to cover the liability of bodily injury to those involved in an accident, and physical harm caused by theft or damage to the vehicle.
Protecting Harvested Inventory
Cannabis dispensary owners have worked hard to open and run their business, so it is important for them to protect their business from risks. This includes protecting their business from claims that a product caused injury or damage. The cannabis industry is still very new, leaving business owners more susceptible to these types of allegations. A product liability insurance policy will protect dispensaries from liability if they become the subject of a lawsuit and/or a court finds the business responsible for any injury or losses.
Call the Cannabis Insurance Agency About Property Damage Liability
Properly covering a dispensary with the right amount and type of property damage liability insurance requires working with an insurance broker who is experienced in the industry. If you are interested in insuring your cannabis dispensary, or any other type of business, contact the experienced cannabis insurance brokers at MFE Insurance to get the right insurance policy for your business needs.