Am I High Or Is My Stash Covered?

blog-image_2014-10-22Enservio customers have been asking: so what is the appropriate response to contents coverage pertaining to cannabis loss? Cannabis plants are valuable, and theft is not uncommon.

To follow ISO standards, the loss of a cannabis plant would typically amount to a $500 settlement. That’s what ISO standards cover for loss of “plants, trees and shrubs.” But these are not normal plants, and a lawsuit could certainly ensue. Insurers nationwide ought to be prepared to address these issues.

Legal recreational marijuana use and possession is on the November ballot for voters in Alaska, Oregon and the District of Columbia. If passed, the laws will also allow people over the age of 21 to grow up to six plants. Most likely these states will join Colorado and Washington in ending marijuana prohibition. In April the Pew Research Center reported that a majority of Americans are now in favor of some form of legalization. As insurers, are we ready to address a response for when a policyholder calls to make a $24,000 claim for the loss of six legally-grown pot plants?

It would be ironic if the current administration doesn’t address the legalization issue at the Federal level after November, seeing how Washington D.C. will be free to light up.  At the very least, punitive jail sentencing will lessen. In an October 5th editorial, the New York Times wrote “Decades of arresting people for buying, selling and using marijuana have hurt more than helped society, and minority communities have been disproportionately affected by the harsh criminal penalties of prohibition.” Laws and regulation will erase the black market and build badly needed tax revenues.

Whatever your stance is on this issue, the momentum of public opinion favors legalization. So what are insurers operating in legalized states doing to cover cannabis? For answers, we turned to the Allstate office operating in Colorado. They have nipped this one in the bud, so to speak. According to a spokesperson there…

“In Colorado, lawfully-possessed, processed marijuana is not excluded and is limited to the personal property limit of the homeowner’s policy. Whether it is medical or non-medical is not relevant to coverage. Fire is a covered peril, and coverage of an accidental fire would not be impacted by whether or not it was started in connection to lawful marijuana use.

“Marijuana plants grown with a license for personal use would be limited to the perils and limits under additional protection for trees, shrubs, plants and lawns, but not exceeding the legally-allowed limit. Policies can have different dollar-amount limits for the total coverage of trees, shrubs, and plants as well as maximums for an individual tree, shrub, or plant. Marijuana plants grown for business purposes are not covered.”

For a more in-depth look at this issue, please see my article in Claims Journal, “Insurers Still Grapple with Marijuana Coverage Questions” by clicking here.

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