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Basic Sections of a Cannabis Insurance Policy

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:

Policy Section Purpose
Declaration Pages

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.  

Policy Conditions

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

DISCLAIMER: Material presented by Owner website is intended for information purposes exclusively. It is not meant for professional insurance or legal advice, to induce or solicit new clients, and must not be construed as such. Each individual situation is unique and requires a licensed insurance broker or attorney in your state to evaluate and recommend insurance or provide legal advise respectively. OWNER IS NOT LICENSED IN EVERY STATE. Each insurance company, policy, and broker are unique with their terms,conditions, and product offerings placing the responsibility of the user to conduct and rely on their own due diligence.