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Legal Marijuana Grow Ops: An Insurance Perspective

With the legalization of marijuana now officially given a date and many legal growing operations having already emerged to provide a supply for medicinal purposes a logical question for interested homeowners and business owners is – how is my insurance affected?

While this area of insurance is changing below you’ll find out how insurance companies are treating legal insurance growing operations currently.

Do insurance companies cover marijuana growing operations?

While it may be perfectly legal to grow marijuana if you have the proper permits that doesn’t mean insurance companies are on the same page. For example this landlord’s insurance was cancelled when he informed his insurance company that his tenant’s were operating a legal growing operation. In fact the tenant wasn’t even required to notify his landlord despite being allowed to grow up to 60 plants. A concerned neighbour’s call brought the landlord out who discovered his tenant’s growing operation. Both the landlord and the insurance company were concerned about the fire hazard. The insurance company also cited a greater likelihood of water damage mould vandalism and burglary – they classified growing operations as a high-risk activity and were not open to covering it. Furthermore illegal growing operations have caused headaches for insurers in the past.

However while many traditional home insurance companies aren’t offering insurance coverage for marijuana growing operations that doesn’t mean insurance coverage isn’t available. The insurance industry is currently struggling with how to cover these legal operations. According to the Canadian Underwriter many policies are being placed in specialty markets combined with a personal liability policy – but it’s a challenge for the industry as a whole. Much like the development of coverage for Uber and AirBnB however the industry is sure to develop a strategy and begin offering better and accessible coverage for clients soon.

Aside from the inherent risks with growing marijuana there’s also the problem of growing operations being a business. If you’re operating a business out of your residence (i.e. selling the marijuana produced) your regular home and tenants policy would not automatically cover anything associated with the business operation. As a matter of fact business operations on the premises are usually specifically excluded. That means regardless of the marijuana anything to do with your business wouldn’t be protected unless you have a proper commercial policy in place.

Marijuana Growing Facility Insurance

If you’re operating a legal marijuana growing operation and need insurance contact your broker. They’ll be able to ask the right questions and find the right company to insure you. For example some of the products available include coverage for a marijuana growing facility licensed by Health Canada to cover building equipment stock crops and transport as well as business interruption equipment breakdown and a variety of liability coverages on a customized commercial policy. There are strict requirements for this coverage however including the property having a monitored burglary and fire alarm system electrical inspection a safe and a Health Canada license. The facility is expected to also be in compliance with all of Health Canada’s regulations. Marijuana dispensary insurance is also available.

If you’re operating a legal marijuana growing operation or looking to start as the drug becomes legal be sure to talk to an insurance broker to make sure your property and investments are protected. They’ll be able to help find you the right policy for you and your business.