Marijuana Business Insurance Property Exclusions

Mark StraussBusiness | Commercial Insurance

Despite the fact that insurance coverage is available for marijuana related businesses as is the case with most commercial insurance policies all marijuana business insurance policies contain both liability and property exclusions. Even though insurance is designed to cover a broad range of losses, exclusions exist because part of the insurance arrangement requires that businesses take a responsibility to prevent claims as in many instances losses can be controlled through proper risk management.

Below are common marijuana business insurance exclusions and warranties found within the property coverage form. Please note that these exclusions and warranties have been uniform across the spectrum of those insurance providers that are offer insurance coverage to marijuana related businesses.

Marijuana Business Insurance Property Exclusions

  • Changes to Premises
    • Property where the risk of loss or damage has been materially increased by changes in your premises.
    • Property located in expansions of your premises shown in the Declarations.
      • The rationale behind this exclusion is unless the company agrees to any changes in writing the insurance company will not be responsible for a loss if the change does not meet their underwriting guidelines and approval.
  • Invalid Payments
    • The rationale behind this exclusion is the company does not want to be responsible due to any losses arising due to bad checks, credit cards or other forms of payment. 
  • Spoilage
    • The rationale behind this exclusion is the insurance carrier does not want to provide coverage for losses arising out of spoilage to perishable stock. If you have any stock that is perishable for an additional premium spoilage coverage can be purchased. 
  • Marijuana Stock/Plants While Growing
    • The rationale behind this exclusion is the insurance carrier does not want to provide coverage for losses to inventory, stock and/or marijuana plants while growing. If you have a marijuana grow operation this exclusion would be removed during underwriting and an additional premium would be applied for protection. 
  • Property and/or Stock in Transit
    • The rationale behind this exclusion is the insurance carrier wants to make certain proper risk management protocols are in place the transport of any product. For an additional premium property or stock while it is in transit can be added onto your policy.

Marijuana Business Insurance Property Warranties

  • Locked Safe Warranty
    • It is warranted that the safe used to house all marijuana stock and/or inventory will be bolted to the ground and weigh 800 lbs or more with a one hour fire rating.
    • It is warranted on the policy that all inventory of marijuana and marijuana containing items is kept locked in a safe at all times during business and non-business hours except for inventory on display. If this requirement is not met theft coverage will be excluded from your marijuana business insurance policy in its entirety.
      • The rationale behind this warranty is the insurance carrier wants to make certain that due to the possible theft potential of your inventory that proper risk controls are put into place. 
  • Protective Safeguards
    • Theft coverage is subject to maintenance and full use of a central station burglar alarm. If no alarm is used, than theft protection will not apply.
      • The rationale behind this warranty is the insurance carrier wants to make certain that an alarm must be in the ‘on’ position during all non-working hours and/or whenever your premises are unoccupied. This will enhance the possibility from a theft occurring from your premises during non-working hours.
  • Show Windows
    • Property displayed in show windows and in showcases not opening into the interior of the premises is considered protected only when it is displayed behind swinging plate glass or its equivalent secondary to window-pane or behind metal bars or grille entirely across window or showcase, or behind shatterproof laminated glass or behind other burglary resistive glazing material such as polycarbonate or acrylic.
      • The rationale behind this warranty is the insurance carrier wants to eliminate the possibility of a theft occurring from your premises during business hours.
  • Records & Inventory
    • Accurate records much be kept for the duration of status of limitations set by the state your marijuana business is licensed in. Accurate records and inventory means a description, amount, value/unit, and date received of stock. If you have a claim of loss or damage to inventory and/or stock the insurance company will review the following:
      • Itemized inventory of your stock;
      • Records of all purchases and sales whether cash or credit
        • The rationale behind this warranty is the insurance carrier wants to eliminate the possibility of insurance fraud and to make certain that they loss gets correctly settled based on what was on your books are receivables. 

Make certain you take the time to read your marijuana business insurance policy as marijuana business insurance property exclusions will impact your ability to be compensated for property losses unless you adhere to the loss control requirements of the policy.

This article is intended for informational purposes only and is not insurance advice or a substitute for consultation with a licensed insurance broker to address your particular risk or circumstance.

Mark Strauss
Insurance Broker & Advisor
As a trusted Portland Oregon Insurance broker I take a thorough approach in my work and listen to what you have to say and help solve your risk concerns. I don’t have an allegiance to any one insurance company, you can be certain not only will you be insured correctly but the insurance in place will be the most competitive premium that is available. Contact me to help diagnose what your insurance needs might be, my hands-on approach will offer you personalized peace of mind.