Depending on the insurance policy and carrier, the building and business personal property (BPP) coverages are designed to cover medical and recreational marijuana businesses or landlords. This coverage is also known as first party insurance with the insurance company providing indemnification to the marijuana business insured.
Depending on if you’re a marijuana landlord or business owner, coverages can include the building structure, furniture, fixtures, grow equipment, machinery, stock, and tenant improvements to name a few. Coverages might not include, money, securities, property covered elsewhere, and vehicles depending on the insurance policy.
The most common claim has been theft of marijuana products. The BPP can provide coverage for this property under the definition of “stock.” Most insurance policies offer specific definitions with marijuana insurance policies being no exception. Depending on the definition within the insurance policy, stock can be generally described as merchandise in storage or for sale to include the raw materials and in the process of becoming a finished product.
For marijuana stores or dispensaries, the stock can be easily identified as what is on the shelf to be sold or in safekeeping. This would not only include the cannabis flower, but derivatives such as concentrates and edibles. For the marijuana grower or infused products companies the relevance of the incorporation of raw materials and in the process of becoming a finished product is relevant for coverage protection.
The importance of insurance your business property to value is important. Otherwise, a coinsurance penalty might apply when the value you have insured versus the total value of the marijuana business property might trigger a penalty for by the insurance carrier. Most policies are either 80% or 90% coinsurance. The higher percentage will result in less being paid by the insurance carrier.
How do I know if I have coverage for my marijuana or cannabis products?
There are two important areas to verify if coverage exists for the marijuana products. The application and declaration page included with your insurance policy.
How much coverage do I need for my marijuana building or BPP?
Each individual situation is unique and requires a healthy discussion with a marijuana insurance broker.
What type of losses may be covered on a marijuana insurance policy?
Depending on the insurance policy and specific terms and conditions, the majority insurance policies provide coverage through a Special Cause of Loss form attached to your insurance policy. Within this document it might exclude coverage for earthquakes, flood, etc… However, the primary perils include fire, lightening, explosion, windstorm or hail, smoke, vandalism to name just a few.