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Although the cannabis industry is currently booming, it still faces many challenges. Here’s what happened...
Why is Insurance for Cannabis Companies Important?
Cannabis businesses can leverage insurance to protect themselves from various risks, streamline their operations, and establish credibility within the industry.
Navigating Complex Regulations
Marijuana’s legal status is complicated, with varying laws at the state and federal levels. Insurance helps companies navigate this complex environment and mitigate risks.
Securing Financial Assets
With limited access to traditional banking, cannabis businesses often deal in large amounts of cash. Insurance provides a crucial safety net for these assets, protecting them from potential loss.
Managing Product Liability
Despite strict labeling, cannabis products can lead to health issues or property damage, and contamination can result in costly recalls. Product liability insurance protects companies from these risks.
Protecting Property & Inventory
Cannabis crops and inventory are highly valuable and susceptible to theft, vandalism, and other property damage. Insurance provides a back-up plan, protecting your valuable assets.
Cannabis Insurance Coverage & Policies
These coverages form the foundation of any risk management program for cannabis companies:
General Liability
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General Liability
General liability offers broad protection against some of the most fundamental risks companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.
Workers’ Compensation
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Workers’ Compensation
When employees sustain work-related injuries, employers are typically responsible for their medical costs and lost wages. This policy covers these expenses, protecting employees while simultaneously keeping cannabis companies running smoothly.
Cyber Liability
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Cyber Liability
Cyber insurance protects companies from third-party lawsuits relating to electric activities (i.e., phishing scams). Plus, it offers many recovery benefits, supporting data restoration and reimbursement for income lost and payroll spent.
Employment Practices Liability
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Employment Practices Liability
Any company with employees faces the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects companies against lawsuits related to employment practice
Cannabis Specific Insurance Coverage
These policies are essential for or can be tailored to the needs of companies operating in the cannabis space:
Product Liability
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Product Liability
Cannabis companies that offer tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Products liability insurance covers defense fees and settlements, even for ungrounded claims. This coverage is particularly critical in the cannabis space as testing and manufacturing aren’t regulated at the federal level.
Property Insurance
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Property Insurance
Property Insurance is a first-party insurance policy, reimbursing cannabis companies for direct property loss (i.e., vandalism, fire, or natural disaster). This policy covers real property, business personal property, and cannabis inventory.
Directors & Officers
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Directors & Officers
Shareholders, competitors, investors, etc., can sue a cannabis company’s executives, putting their personal assets at stake. Directors and officers (D&O) insurance protects these assets from lawsuits alleging leaders of wrongful acts managing the business.
Crop
Crop
Crop coverage is a type of first-party insurance that protects cannabis businesses from the financial loss of a crop due to a covered event, or peril, such as a fire caused by lightning. This specialized policy is designed to cover a plant’s entire lifespan, from seed to finished product.
Crime
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Crime
Crime insurance protects cannabis businesses from financial losses caused by a range of criminal activities, including theft, forgery, and other financial fraud. Given the high value of cannabis inventory and the industry’s reliance on cash transactions, crime insurance is a crucial safeguard against significant financial loss and damage to a company’s reputation.
Cannabis Insurance Costs
The cost of insurance for cannabis companies is highly variable, depending on several key factors. A company’s size and stage of development play a significant role, as do the specific risks being insured, or “exposures.” An insurer will also evaluate a company’s safety, compliance, and risk management practices to determine a premium.
The program’s structure, including the deductible amount and the company’s willingness to assume more risk, also influences the final cost. Finally, a company’s claims history, specifically the number and type of past claims, will be a major factor in calculating the insurance premium.
Cannabis Claims & Examples
Navigating a commercial insurance claim is often challenging, often fraught with confusion and multiple unknown factors. The following four-part series outlines the ins and outs of commercial insurance claims:
Types of Cannabis Companies that Need Insurance
Cannabis Insurance Frequently Asked Questions (FAQ)
The primary difference is that many standard insurance carriers will not underwrite policies for cannabis businesses due to marijuana’s federal illegality. As a result, cannabis businesses must seek specialized insurance policies from carriers who understand the unique risks, such as crop loss, product liability for a federally restricted substance, and limited banking access.
While specific needs vary by business type, key coverages for most cannabis companies include General Liability to protect against common accidents, Product Liability to cover claims related to the products themselves, Commercial Property to protect valuable assets and inventory, and Crop Insurance for cultivators to safeguard against the loss of their plants.
The cost of cannabis insurance is influenced by several factors, including the company’s size, its specific business operations, and its claims history. By implementing robust safety protocols, ensuring regulatory compliance, and working with an experienced insurance broker who can tailor a policy to their specific needs, cannabis companies can often find more affordable and comprehensive coverage.
Cannabis Insurance Quotes
Finding cannabis insurance coverage doesn’t have to be painful. We aim to make the purchasing experience as streamlined and intuitive as possible.
1
Get a quote
Use our custom-built digital platform to get quotes fast. We automate clerical tasks that plague traditional insurance brokerages, giving us more time to be responsive and alert to your company’s needs.
2
Pair with a specialist
No two organizations are the same. Our team of coverage experts partners with your team to engineer your risk management strategy, together. We take the time to understand the intricacies of your company to get you the best possible coverage.
3
Stay one step ahead
To do better, you need to know better. With changing political, technological, legal, and economic landscapes, staying ahead of the curve is critical.
Our in-house team is tapped into the latest developments in your industry, proactively ensuring you’re covered.
Schedule Time with a Cannabis Expert
Risk Calibration
Let’s figure out if you’re under- or over-insured and whether your current policies have detrimental gaps.
Identify Cost Savings
We’ll compare your current policies with our extensive benchmarking database to see if your risk and costs have kept pace.
Risk Calibration
Walk away with a detailed plan to manage risk as your company scales — no strings attached.
Why Choose Founder Shield?
Founder Shield is a leading insurance provider that specializes in offering comprehensive coverage for cannabis companies through our sister company AlphaRoot, offering numerous benefits and advantages over traditional insurance providers. Here’s a breakdown of some of the key features and benefits that you’ll enjoy with us:
Benefits of Choosing Founder Shield
Industry Expertise
Founder Shield is focused on protecting rapidly evolving cannabis startups. We ensure that our products are tailored to meet the unique needs of cannabis companies.
Customized Solutions
Founder Shield offers bespoke insurance policies that are designed specifically for each client’s needs, ensuring comprehensive coverage that addresses the unique risks associated with cannabis operations.
Fast Quotes
With Founder Shield’s streamlined quoting process, you can receive a personalized quote for your cannabis insurance quickly, allowing you to make informed decisions fast.
Ease of Use
Founder Shield’s user-friendly digital platform makes it easy to manage your insurance policies, submit claims, and access important documents whenever you need them.
Dedicated Support
Founder Shield provides exceptional customer service, with dedicated account managers who are always available to assist you with any questions or concerns you may have about your insurance coverage.
Scalable Coverage
As your cannabis business grows, Founder Shield’s insurance policies can grow with you, ensuring you always have the right level of coverage for your changing needs.
Founder Shield is a preferred choice for cannabis businesses because of our specialization in the industry. We offer flexible and customized insurance policies, a speedy quoting process, and exceptional customer service with dedicated account managers.
Great service – proactive, responsive, go beyond what I have expected from previous providers. The team do a wonderful job
Amit PatelGeneral Counsel • Urbanstems