Basic Sections of a Marijuana Insurance Policy
An insurance policy is a contract between the cannabis business with the insurance company. The basic structure of an insurance policy will be similar with most insurance companies. The number of pages in the policy can range from approximately 50 to over 100 pages depending on the coverages selected.
The insurance company or its representative may produce the policy using documents that are standardized, combination of a standardized and manuscripted, or manuscripted. The primary distinction between standardized versus manuscripted is the latter documents are likely drafted with a specific intention.
The following are typical sections incorporated within a marijuana insurance policy:
- Declaration Pages
- Schedule of Forms
- Common Policy Conditions
- Commercial General Liability Coverages
- Buildings & Personal Property Coverage
- Cause of Loss
- Exclusions and Endorsements
- Additional Insured (If Applicable)
- Other Policy Forms: Depends on Coverage Selection
Below is a brief summary of important sections of the document:
Purpose: Provide basic information such as insurance company, coverage dates, insured name, premium breakdown, policy number, business description and endorsements or exclusions. Important to verify if the name of the cannabis business is correct.
Tip: Read through the endorsement and exclusion list to determine if the subject is most relevant to your business.
Purpose: Notification by the insurance carrier of particular conditions such as cancellation, changes, examination or audit requirements, premium payments, and transfer of rights and duties.
Tip: Certain insurance carriers might audit your revenue at the end of the policy term to justify the premium you paid. Don’t be surprised if you’re notified to produce sales records.
|Commercial General Liability Declarations||
Purpose: Provides specific amounts or limits of liability coverages, premium rating basis, business description, address, type of entity, etc..
Tip: Review the coverage limits to verify if these amounts are correct. The premium rating is how the insurance carrier prices the coverages. Some carriers price on revenue. Other carriers may price on square footage.
|Commercial Property Declarations||
Purpose: Provides specific amounts or limits of property coverages, premium, deductibles, replacement cost or actual cash value, address, etc…
Tip: Validate the coverage amounts are correct along with understanding if offered with coinsurance and replacement or actual cash value.
|Various Endorsements and Exclusions||
Purpose: The insurance carrier is providing notification of any endorsements or exclusions. The former modifies and latter removes coverage.
Tip: A quick scan of the schedule for forms may trigger a subject of interest. For example, the majority of cannabis liability insurance policies excluded product and completed operations coverage. This means