Determining Insurance Coverage Amounts and Limits

Insurance Limits Through Careful Analysis of Many Factors Required

The amount of insurance protection your cannabis operation will need depends on several factors.  

Such as:amount of coverage_edited-1

  • Liability versus property coverage amount should be treated differently when determining those limits.  The former recognizes legal liability by a third party due to negligence and could be difficult to determine a specific coverage limit.  Essentially, the company’s balance sheet and reputation is at risk.  The latter recognizes coverage for the property owned by the cannabis company.  The amount of coverage can be more easily determined for a piece of extraction or grow equipment as opposed for a liability related claim.    
  • Company’s risk tolerance level if a claim was to occur.  A high risk tolerance means the company is willing to absorb these risks and pay for them internally.  For example, a retailer has $25,000 of displayed product for sale on a daily basis.  The theft of the product would result in the cannabis retailer paying for their loss versus relying on insurance.  
  • Insurance budget
  • Likelihood of a certain type of insurance claim was to happen.  This can be difficult to predict as it would require statistical and actuarialy analysis.  
  • Concerns by investors or landlords for certain types of insurance products.  Their interest may be required.  
  • Statutory requirements for certain types of insurance coverages
  • The insurance policy being purchased may have specific requirements that can impact the settlement amount after a claim.  For example, deductibles, coinsurance, and settlement options could reduce the amount paid by the insurance carrier.  

Choosing the Right Cannabis Insurance Broker will Help

The market for marijuana insurance companies is limited.  This and many other factors are reasons why choosing an experienced marijuana insurance broker will help demystify coverage limits and amounts.   

DISCLAIMER: Material presented by Owner website is intended for information purposes exclusively. It is not meant for professional insurance or legal advice, to induce or solicit new clients, and must not be construed as such. Each individual situation is unique and requires a licensed insurance broker or attorney in your state to evaluate and recommend insurance or provide legal advise respectively. OWNER IS NOT LICENSED IN EVERY STATE. Each insurance company, policy, and broker are unique with their terms,conditions, and product offerings placing the responsibility of the user to conduct and rely on their own due diligence.