Marijuana Property Insurance Provisions

Analyzing coverage provisions of a marijuana business insurance policy can be a daunting and tedious task. A client recently asked me why do marijuana business insurance policies contain property provisions? The answer to that question is insurance provisions exist when a risk is too great the insurance carrier wants you, the insured, to adhere to specific requirements and share the burden of the risk.

For marijuana businesses because one of your largest risk exposures will be theft of product. Because of the high theft exposure marijuana business insurance policies have limitations when it comes to insuring both inventory and cash. Because of these limitations you need to self-insure and fortify the security measures that you have in place for your business.

• Is your entrance equipped with security doors?
• Do you have an intercom system?
• Do you have cameras both inside and outside the premises?
• Do you have a monitored alarm system?
• Do you have armed or unarmed security guards?
• Do you have weapons on the premises?
• Do you have a safe? If so, how much does it weigh? What is its fire rating and will it be bolted to the ground?

The above questions need to be addressed because the following notable marijuana insurance coverage property provisions limit the amount of protection if you don’t follow these specific safeguards:

• Property displayed in show windows and in showcases cannot open into the interior of the the premises and is considered protected only when it is displayed behind swinging plate glass.
  
  

• Property where the risk of loss or damage has been materially increased by changes in your premises. Non-insurance speak: If you add square footage or make significant changes
  
  

• Property located in expansions of your premises shown in the Declarations. Non-insurance speak: the location has to be listed in the policy declaration in order for coverage to apply.
  
  

• It is warranted on the policy that all inventory of marijuana and marijuana containing items are kept locked in a safe at all times during business and non-business hours except for inventory on display. If this requirement is not met theft coverage is excluded from the policy in its entirety.
  
  

• It is warranted that the safe used to house all marijuana stock and/or inventory will be bolted to the ground and weigh 800 lbs or more with a one hour fire rating.
  
  

In addition to the above all policies have a limitation with how much protection is afforded to stock on display. For marijuana dispensaries you want to review your policy and know what this threshold is.

Marijuana businesses present new risks for the insurance industry as such it is important when you read through your marijuana insurance coverage you:

1. Read all provisions and exclusions.
2. Read the exceptions to the exclusions.

As you can see there are more than a few moving parts that come into play with the property coverage that is part of your marijuana business insurance coverage.

I specialize in marijuana business insurance, if you’re interested in discussing marijuana business insurance or would like to receive a quote please call me at (503)-922-4847 or select “Request a Quote” below.

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