Look Inside your Cannabis Insurance Policy to Avoid Surprises

The following is a list of exclusions we’ve found on a variety of Cannabis commercial general liability policies over the years, we had to publish because they can lead to harsh consequences or surprises.  

Typically, exclusions are separated from the main body of the commercial liability and meant to notify the policy holder of circumstances when coverage may not be offered.   

7 Costly Exclusions

Cannabis business owners should look for these exclusions

1. The Washington Changes to Defense Cost Exclusion:  Perhaps the worst exclusion we’ve seen on a cannabis general liability policy because it gives the right to the Insurance carrier to seek reimbursement for claims that are not covered.  The problem arises when other policy conditions require the insured to notify their carrier of potential claims.   This exclusion will leave many cannabis companies with a big dilemma or bill they weren’t anticipating.
   
2. The Products and Completed Operations exclusion:  Many cannabis companies were never informed by their agent or broker the policy doesn’t cover your product liability.  If someone gets sick off your weed, you need to buy a separate insurance policy for product liability.
   
3. The Breach of Contract Exclusion:  Cannabis insurance companies want to be certain their insurance policies are not covering broken promises with other parties through written or oral agreements.  Don’t plan on using your insurance for claims involving money owed to other parties because it didn’t work out between you.
   
4. The total mold, mildew, and other fungi exclusion:  Cannabis companies who are being sued by landlords or other parties might not realize no coverage exists for grow sites covered with mold or mildew.
   
5. The Protective Safeguard Exclusion:  The reason certain cannabis insurance policies add this exclusion is to notify their clients of conditions you must follow for covering the actual cannabis products.  One cannabis carrier requires the safe to be bolted to the ground if it weighs between 800 lbs. to 2,000 lbs.  Many Cannabis Business Owners will question the need to bolt a 2,000 pound safe.  This same carrier requires a 1 hour fire rating for your safe.  Don’t bother filing a claim if the same was suppose to only last 30 minutes in a fire.
   
6. The Limitation to Designated Premises or Project Exclusion:  This exclusion makes our list because it surprises many cannabis companies when they realize their insurance is specific to the locations listed on the insurance policy.  If you need your insurance to cover an offsite event, then this exclusion doesn’t provide the protection you need.  Many insurance brokers fail to realize the certificate of insurance they issued for the 420 event holder could be meaningless.  Many cannabis event holders are probably sitting on certificates of insurance that could be worthless.
   
7. The Skin Tanning Exclusion:  This is not the worst, but simply the dumbest exclusion we’ve seen included on a cannabis general liability policy.  What does skin tanning exclusion have to do with a cannabis company remains a mystery to most.