Commercial Liability and Product Liability Insurance Limits

The Massachusetts Cannabis Control Board is moving forward with the approval of 935 CMR 500.00 and includes commercial Insurance. 

Below are those important requirements:

Liability Insurance Coverage or Maintenance of Escrow (1) A Marijuana Establishment shall obtain and maintain general Liability Insurance Coverage for no less than $1,000,000 per occurrence and $2,000,000 in aggregate, annually, and product liability insurance coverage for no less than $1,000,000 per occurrence and $2,000,000 in aggregate, annually, except as provided in 935 CMR 500.105(J)(2) or otherwise approved by the Commission. The deductible for each policy shall be no higher than $5,000 per occurrence.

This means procuring a commercial general liability policy with limits of $1,000,000 per occurrence and $2,000,000 per aggregate and product liability with limits of $1,000,000 per occurrence and $2,000,000 per aggregate.

What other insurance requirements exist in 935 CMR 500.00?

Licensees will need to purchase workers compensation insurance if they have employees.  The regulations does not indicate any other obligations such as naming the State of Massachusetts as an additional insured. 

What is the purpose of Commercial General Liability? 

This is a business insurance policy covering the premise or business location for liability, personal and advertising injury, and legal defense.  The State of Massachusetts has determined $1,000,000 per occurrence and $2,000,000 per aggregate will provide adequate protection from third party lawsuits. 

What is the purpose of Product Liability? 

Product liability is a type of insurance policy protecting a cannabis company from third party lawsuits.  An example would be a recreational marijuana customer becomes sick from a cannabis product bought at a store.  The customer files a lawsuit against the retail and possibly the manufacturer.  The State of Massachusetts has determined $1,000,000 per occurrence and $2,000,000 per aggregate will provide adequate protection from third party lawsuits. 

What does $1,000,000 per occurrence and $2,000,000 per aggregate mean? 

Per occurrence is the maximum amount paid primarily for bodily injury and property damage.  Per aggregate is the the maximum paid for multiple types of claims. 

How do I buy insurance to meet the requirements in Massachusetts? 

Please contact us.