5 Cannabis Insurance Must-Haves - CannGen Insurance Services LLC

No matter which category your cannabis business falls into, it is vital to ensure you are protected with quality insurance on all fronts. With an evolving industry and states with different compliance laws that are ever-changing, the cannabis industry has its fair share of insurance needs. Which coverages should be on your list? Take a look below at your 5 cannabis insurance must-haves to find out.

Crop

As discussed in our blog, the ‘411 on Cannabis Crop Insurance’, crop insurance is an important type of specialized coverage for cannabis, hemp, and CBD cultivations. In general, this type of coverage protects seeds, seedlings, clones, vegetative plants, flowering plants, harvested plants, and finished stock. Additionally, it typically provides protection against many risks such as fire, theft, and vandalism. If you are a cultivator in the cannabis industry, crop insurance is a must-have to protect your operation as many instances can be catastrophic to your business if there is no coverage. To learn more about crop insurance, click here.

Commercial Property

Commercial property insurance is a must-have for all cannabis industry organizations. In general, commercial property insurance in cannabis protects businesses’ building(s) as well as what is within them for a majority of facets such as cultivators, manufacturers, wholesale distributors, and even transporters. This type of coverage is vital as it protects real property, business personal property, cannabis inventory as well as 3rd-party care custody control for distributors. At CannGen, commercial property policyholders obtain coverage for areas in accounts receivable, employee dishonesty, money, and securities, property in transit, and many more. See the full coverage summary here.

Directors & Officers (D&O)

Designed to protect those serving as a director or an officer at an operation, D&O insurance is there to cover personal losses and can help reimburse legal fees that might be incurred due to a lawsuit. According to Investopedia, “D&O insurance is akin to corporate governance, corporate law, and the fiduciary duty owed to stakeholders, such as shareholders and beneficiaries.” Thus, especially in the regulatory-thick cannabis industry, having this type of projection is vital.

When searching for a reputable D&O coverage provider, ensure they offer complete side A, B and C coverage.

Side A: An individual officer/director is insured and their personal assets are what is at risk.

Side B: The corporation is what is insured so the corporate assets would be at risk.

Side C: This coverage ensures protection for the corporate entity itself.

Product Liability

Product liability coverage for cannabis, hemp and CBD operations protects from claims that arise due to a business’s consumer product. These claims can be due to many instances such as property damage and bodily injury (known as first-party claims) or even if consumers were to use a product linked to your business that has caused harm or damage to others (known as third-party claims). What is important to note is that even if your operation does not sell the product, a product liability lawsuit can come after every level of the chain of distribution and your operation can be held liable.

Product liability claims usually fall under one of these categories:

Negligence resulting in physical or property damage
Breach of Contract with consumer product quality
Intentional Misrepresentation in testing or labeling
Design defects in consumer products
Breach of Warranty arising from unsubstantiated claims

Having product liability coverage means you will have the funds to recover business operations following a liability lawsuit. Learn more about the risks and how you can protect your business on our blog, ‘Product Liability: Do You Know the Risks & Are You Covered?’

Auto/Transportation

If you have ever wondered if you should get commercial auto insurance for your cannabis business, the answer is yes. Many business owners assume that their standard insurance policy will protect their products or other property while being transported. However, once in transit, these coverages often no longer apply.

Commercial auto policies cover the value of your vehicles, the property within, as well as liability protection for third-party damages. However, generally, your coverage shouldn’t stop there. Ensure that your policy also covers hired (rented) and non-owned vehicles. This is vital in instances where employees would be driving their own vehicle to transport products or even run an errand for the company during work hours, and cannabis does not need to be part of the transportation in order for the coverage to apply. To learn more about this cannabis insurance must-have, click here.

Protecting Your Company Against Risk

You can insure your cannabis business against risk with a comprehensive insurance policy. If you don’t currently have an insurance provider, it is important that you find a partner with prior experience working with cannabis companies who offer specialized policies. They should also have the necessary knowledge of state cannabis regulations to ensure your business is fully compliant and covered against potential risks. Contact CannGen here to see what coverages you need to best protect your cannabis business.

More Cannabis Industry News

Want to stay up to date on the latest? You can find more on important topics in the cannabis industry on our news page.

Or get more information about comprehensive insurance solutions for the cannabis, CBD, and hemp industries from CannGen here.

Disclaimer: Information shared is for general purposes only.