The cannabis industry is young, so business owners often do not fully understand what their needs are when it comes to staying protected in the cannabis industry. A cannabis insurance agent can help you determine your needs during a consultation.
However, to get you started, there are certain questions to ask and answer to get a fair idea of what your needs may be based on the type of business you have, your specific risks and compliance regulations you may need to follow.
5 Questions to Ask About Your Cannabis Insurance Policy
Cannabis insurance protects your business financially. Without insurance, your cannabis operation is vulnerable to high out-of-pocket costs that are challenging to cover all at once. This could be in the form of making medical payments, dealing with lawsuits, replacing lost inventory and more. The following are five important questions to ask about your cannabis company before starting your cannabis insurance policy.
What are My Biggest Hazards and Risks?
It is important to identify risks related to your cannabis business. The hazards and risks may vary based on your specific location and your exact type of business. For example, a grower does not have the same risks as a dispensary as their operations are completely different. However, some of the more general hazards and risks associated with the cannabis industry include:
- Loss of crops
- Product liability
- Product recall
- Workplace injury
Any company that relies upon the cultivation, packaging, delivery and ultimate sale of a drug is vulnerable to an increased risk of product liability, regardless of how safe the drug in question is. As a result, issues such as product tampering and theft are more likely within the cannabis industry.
What Is and Is Not Covered With Cannabis Insurance?
Most cannabis insurance providers customize their policies based on the specific needs and coverage preferences of the policyholder. If you have received a proposed policy or currently have a cannabis insurance policy and are considering switching providers, you should assess the coverages you currently have and what is not included, along with identifying the types of coverages that are the most important for your business.
What Types of Coverages Do I Need Most?
In addition to general liability coverage, there are additional types of coverages your company may need. Depending on the type of business (i.e. grow operation, cannabis delivery, dispensary, etc.), you are likely to have unique coverage needs, which is why it is important to personalize your policy accordingly. Several common types of additional coverage to consider adding to your policy include but are not limited to:
- Workers’ compensation
- Product liability
- Commercial auto
- Equipment breakdown
- Cyber liability
- Loss of income
- Employee benefits
- Crime insurance
- Property insurance
You should ask yourself how many employees you have, the risk you have with your crops or finished product, the equipment you rely upon and where you operate to determine your precise coverage needs.
Does My Cannabis Insurance Policy Have Any Limits?
Many insurance policies have limits. In addition to the deductible costs, having a strict limit that does not cover your needs could leave you liable for high out-of-pocket costs when a claim is made. Understanding limits and purchasing umbrella (excess liability) insurance if your limits are not high enough based on the risk you are willing to take on is important.
What Compliance Regulations Must I Follow?
The cannabis industry is highly regulated, and failing to comply with regulations could lead to fines or the loss of your cannabis license. Be sure to ask about the specific regulations you must follow (even if you think you know them) to ensure you are in compliance. You may need to take additional steps to ensure compliance if there are any broken work processes or issues with your crop or products that may leave you vulnerable.
Choosing The Right Cannabis Insurance Provider
Mitigating risk is an essential part of operating within the cannabis industry. This is why it is important to choose a reputable and experienced cannabis insurance provider. In doing so, discuss with them all of the coverages that are included in your policy, along with your deductible and premium costs.
If you are unsure about the quote you receive, you can compare quotes from multiple providers to ensure you receive the best coverage possible. Most importantly, however, it is important to choose a cannabis insurance provider that is reputable and has a history of an easy claims process.
Protect Your Business With Cannabis Insurance
If you are in need of a cannabis insurance policy for your company, reach out to the team at MFE Insurance today. We can help you find the coverage you need to ensure your business is less susceptible to high out-of-pocket costs and is properly protected based on your individualized needs.