Commercial Insurance for Cannabis Grow Equipment

Insurance for commercial cannabis equipment is offered through a coverage known as Business Personal Property or “BPP.”  The most important factors to consider when buying this type of coverage are:

  • What is the value of the equipment?
  • Is the coverage offered on a replacement cost basis or actual cash value?
  • Does the coverage include a coinsurance percentage?

The value of the equipment is the amount the insurance carrier will use to determine to be paid should a claim arise.  It will be important for this number to be accurate, if you desire full recovery.  Replacement cost as opposed to actual cash value have significant differences.  Replacement cost will not reduce the value of the equipment due to depreciation.  In other words, you are receiving full value of the equipment.  Actual cash value will have the opposite effect of depreciating the asset before the claim amount is settled.    

Coinsurance is a penalty for being under insured.  A formula is used to determine the amount of a claim.  To avoid this penalty, it may be in your best interest to simply insure your grow equipment to the value paid. 

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