What Type of Insurance Carriers Insure Marijuana Businesses
When it comes to insuring marijuana operations your local Allstate, State Farm or Farmers Insurance agent or other well known insurance companies will not typically insure cannabis operations. The most well know insurance company or market that formerly covered cannabis companies was Lloyds of London. They exited from insuring the cannabis industry in 2015.
More recently, another insurance carrier Mesa Specialty Insurance Company has quickly vacated from insuring cannabis companies after several years of offering coverage.
Marijuana insurance is bought through a different channel known as Excess & Surplus Lines (E&S) markets offered through a retail insurance broker. Each E&S broker is licensed by the appropriate state and functions as a representative of the insurance carrier by underwriting, quoting, and other processing activities related to insurance.
As you can see from the graphic, the cannabis company contacts a retail insurance broker to begin the application process. The retail broker then submits to the E&S broker the application who is authorized to represent the insurance carrier’s cannabis insurance program.
The small number of insurance carriers offering insurance for the cannabis industry have been typically A rated insurance companies. We currently know of one carrier with a B rating. The rating of the insurance carrier might be relevant if contractual obligations require an A rated insurance carrier.
Here are other important considerations when evaluating a marijuana insurance carrier:
- Does the insurance carrier underwrite marijuana operations?
- Does the insurance carrier include the application as part of their insurance policy? If yes, this means the carrier may use the application against you in a claim.
- Besides basic liability are there other coverages for your cannabis operations such as grow equipment, cannabis, and other manufacturing equipment.
- Is the E&S broker and insurance carrier seem professional and relatively accommodating with their program? Some E&S brokers and insurance carriers can be strict and at times unreasonable with their demands. This begs the question how would they be if a claim arises.