Because cannabis is considered to be an emerging industry new cannabis dispensary owners may feel confused about the types of insurance policies they need and where to get them. Loss of income insurance is a core policy that covers lost income if a named peril occurs. It offers coverage to businesses that not only lose income but incur certain expenses due to named perils. In these trying times, dispensary owners should seriously consider investing in this type of insurance policy to safeguard the futures of their cannabis businesses.
Loss of Income For Cannabis Dispensaries
Cannabis dispensaries can benefit from taking out loss of income insurance because the policy will cover any income lost if a named peril occurs. The most common types of named perils are loss due to physical damage to the dispensary, such as a fire, storm or earthquake. It may also cover partial loss of production, such as if an employee is seriously injured and is unable to return to work for a significant period of time.
Certain insurers will even pay out if income is lost due to major disease outbreaks. This tends to only be available as an additional rider, so dispensaries that had this rider will have received a payout for loss of income as a result of the disruption caused by the coronavirus pandemic.
Are Dispensaries Eligible For this Policy?
Cannabis dispensaries are eligible for loss of income policies. However, it is important to read the fine print as many insurers are reluctant to do business with companies that are involved in the production, distribution and sale of marijuana.
Their loss of income policies may have specific exclusions for cannabis business, known as the general cannabis exclusion. Dispensaries are strongly advised to obtain their policies from an insurer with experience in providing insurance for businesses in the cannabis industry.
Advantages of this Policy
Loss of income insurance is often seen as an optional extra, however it should be viewed as an essential policy to cover for unexpected disruption or an unforeseen drop in production. A long period of disruption could create cash flow problems and prevent a business from fulfilling its obligations.
Helps to Protect Your Business
If a dispensary must close due to a covered loss, loss of income insurance serves to protect the business. If a major weather event causes significant property damage or a long-term employee is out of commission, loss of income insurance can cover that lost income.
Many dispensary owners also choose to include the add-on for dependent property coverage. This type of coverage offers loss of income coverage if the clientele of a dispensary is unable to receive their goods as a result of a third-party supplier suffering significant business disruption.
For example, if a major cannabis supplier loses their plants due to flooding, the dispensaries they supply do not have to take the financial loss as a result of not having merchandise to sell as their insurance policy will provide cover.
Will Keep Your Dispensary Afloat
Dispensaries have had an extremely difficult time during the coronavirus pandemic as a result of being ineligible for federal assistance.
Loss of income insurance ensures a dispensary can stay afloat by enabling it to maintain its cash flow. If a dispensary is unable to do business for a significant period of time, loss of income insurance provides the funds necessary to pay the rent and other expenses. In these challenging times, a comprehensive loss of income insurance could mean the difference between reopening and going bankrupt.
How Do I Get This Policy?
Obtaining a loss of income insurance policy is a matter of tracking down the right insurer. There are qualified insurance agencies working with cannabis companies across the country. Comprehensive loss of income insurance is often bundled together with other core insurance policies, enabling dispensary owners to deal with a single insurer and have the peace of mind of knowing they are fully covered.
Work With a Qualified Insurance Agency
Cannabis dispensary owners are well aware that many insurers are reluctant to do business with companies operating within the cannabis industry. Choosing an insurer that specializes in cannabis businesses enables them to speak to someone who understands their business needs.
Working with a qualified insurance agency guarantees access to the knowledge and expertise of a team of professionals who grasp the necessary protections cannabis dispensaries require.
Speak to the Experts at MFE
Loss of income insurance for cannabis dispensaries is a core policy every entrepreneur should have. The difficult state of the world means that disaster could be just around the corner, and loss of income insurance may be the protection that saves your business. Contact the cannabis insurance experts at MFE Insurance to get started on creating a tailored loss of income policy for your business.