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Ask the Expert Q&A: Cannabis Insurance

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From theft and vandalism to product recalls and lawsuits, cannabis companies face a variety of risks as they operate in a rapidly changing industry. To learn how Cannabis Insurance can help protect these businesses against losses, we spoke with Jason Scheurle, National Product Leader, Cannabis, Burns & Wilcox, based in Philadelphia, Pennsylvania.

What are some of the greatest risks in the cannabis industry today?

J.S.: Property loss remains the most frequent claim, so burglary and damage to your building are some of the major risk exposures. In the current landscape, everybody is attempting to safeguard their building to prevent theft, attempted theft, and damage to the building from attempted theft.

What should cannabis business owners be aware of relative to these risks?

J.S.: This product is highly attractive to thieves, so the priority needs to be building security and making sure that everything is in place to prevent possible burglary events — cameras, alarms, guards, shatterproof glass. Everything they can do to safeguard the product is vital.

Which insurance policies can help them respond to these threats, and what are the limits and examples of covered expenses?

J.S.: The standard package policy can potentially address these events, including Commercial Property Insurance for coverage for your building and contents and Commercial General Liability (CGL) Insurance for things like trip-and-falls or assault and battery. The pricing varies depending on the client, the size of the business and its operations. Products Liability Insurance is important as well, which is going to be your coverage in the event that your product has caused potential harm to a user. If someone gets sick and files a claim, you are going to need that coverage in place. 

Are there special considerations or additional coverages available for certain scenarios?

J.S.: Product Recall Insurance can respond to a recall event when a client becomes aware of a product that is approved or past testing that needs to be recalled. There are going to be obvious costs involved with pulling that product out of the chain to ensure it is not ingested. Those costs may fall underneath that policy. This coverage has traditionally been available in an add-on manner, and a limited manner at that, but we now have a partner where we are offering full-limit, standalone Product Recall Insurance. Another new standalone option is In-Transit Insurance, which is a true Motor Truck Cargo Insurance policy for cannabis that does not have to be bought with a package and can cover missing or damaged product. A lot of business owners think about their building and the sales of their product and they cover that, but I am not sure how often they think about whether their product is covered once it leaves their premises. 

What kinds of stipulations are typical in these types of policies?

J.S.: A common question is whether cash is covered as part of In-Transit Insurance or other policies. The intent of these policies is not to cover cash. You may find a very small sublimit for it, but certainly not to the amount that will be in question if they are in fact shipping large amounts of cash. More awareness of how their insurance policies will respond to claims and what is covered and not covered is important. Close communication and discussions about your risk with your broker are going to be vital.

Are there steps that businesses should take or services they should invest in that complement their insurance coverage from a prevention standpoint?

J.S.: Seed-to-sale systems can track all of their product from the moment it is harvested to the moment it is sold. Quality assurance and product testing are also important. We want to be certain that this product is safe for consumption. 

What are the greatest opportunities for brokers to get into Cannabis Insurance?

J.S.: Look into those regions that have recently legalized cannabis, educate yourself on the market, and find clients that are opening businesses and in need of insurance.

What advice would you give brokers to increase their success rates with these products?

J.S.: What we see is timing and efficiency are big in this niche. A lot of these businesses seem to have numerous brokers who have all been asked to help. In a situation like that, it may boil down to who was able to be quick and get there first. However, that is not to say not to do a thorough and complete job, as well. One impacts the other equally. The ability to be quick, efficient, and thorough in the account review is vital.

What services of Cannabis Insurance are specific to Burns & Wilcox and what are the advantages of these?

J.S.: The longstanding relationships we hold in cannabis and the expertise we offer. We have cannabis experts in all package lines and we can cover all lines. Collectively, those of us who specialize in it have been in it now for five to 10 years and the relationships are great. We have held them for a long time, and because of that, we are able to operate quickly and efficiently.

 

Cannabis Insurance

Why your clients might need it: Primarily to safeguard against damage to a building/property/theft; this product tends to be highly attractive to thieves.

Protects against: Burglary and damage, along with product recalls and damaged/missing product.

Expert Opinion: “Look into those regions that have recently legalized cannabis, educate yourself on the market, and find clients that are opening businesses and in need of insurance.”

 

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