No matter what line of business you are in, you need some form of insurance. Cannabis companies in particular have heightened risks due making insurance critical. Choosing the right cannabis insurance provider and policy can be a daunting task and mistakes can definitely be made. Below, Eric Rahn of S2S Insurance Specialists, one of the cannabis industry's leading independent insurance brokerage firms, breaks down common mistakes cannabis related business owners make when choosing an insurance policy and how to avoid them.
1. They don’t purchase insurance at all.
One of the biggest mistakes cannabis business owners are making is not having a policy at all. While the wrong policy is problematic, not having any coverage can be devastating to a new or even an established business. Investing in insurance covers the unforeseen and mitigates risk. Whether a cannabis business is faced with vandalism, theft, product liability, employee law suits, management issues, the right policy can save tens of thousands of dollars or even hundreds of thousands of valuable dollars.
2. They don’t purchase cannabis specific insurance.
Cannabis insurance is a very specialized niche in the insurance industry. Not all insurance agents/brokers have specific knowledge about the risks in the cannabis industry. Insuring cannabis is not like insuring your house or automobile strictly because of the nature of what you’re trying to insure and how it’s viewed by the government. If you don’t have a policy that is specific to cannabis, there may be certain exclusions based on the Schedule I status of cannabis or illegal substances. Those types of exclusions and exceptions can derail a cannabis business owner’s ability to collect on a policy if, or more likely when, there is a claim.
3. They don’t work closely enough with a cannabis insurance specialist
Working closely with someone that knows the cannabis insurance industry is critical when choosing a policy. Cannabis business owners have to ask their agents/brokers questions, lots of questions and the broker/agent needs to be able to answer those questions. Your agent should be asking you questions, as well. Risk grows with your business, is your insurance growing with your business? What’s your tolerance for risk? How much can you afford to lose? Are you currently covered to avoid the catastrophic losses that can shut your doors? Those are some of the blunt but required questions cannabis business owners should be discussing and answering with a cannabis insurance specialist.
4. Cultivators fail to buy crop insurance
If you are a cultivator or a grower, you rely on your cannabis crop for your income. Cannabis is agriculture, just like corn, wheat, or soy. Cultivators have to protect their income; therefore, they must have cannabis insurance and, specifically, crop insurance. Every year, wild fires ravage thousands of acres of land and crops, resulting in millions of dollars of losses for cultivators. While we don’t know where and when these disasters are going to strike, history tells us there is a good chance they are going to happen. Cannabis cultivators must be prepared for this unfortunate reality and take steps now to protect their livelihood.
5. They don’t know what's included in their policy
As a cannabis business owner, knowledge is power. You have to be aware of the changing laws at the federal, state, and local level. You also need to know your business inside and out. Part of knowing your business is understanding what is and is not in your insurance policy. You have to know what is covered and what is excluded. There are many cannabis specific exclusions that are often overlooked. If you have cannabis insurance with cannabis exclusions, it may be time to look at another cannabis insurance provider. You do not want to find out the hard way that you are not covered for a specific incident or claim.
Summary
Having the right coverage in place is critical as an unexpected event like a theft, fire, data breach or product defect can be devastating to your business. With an independent cannabis insurance broker, like S2S Insurance Specialists, you can rest easy knowing you have the right amount of insurance - not too little, not too much - and the most important coverages for your business. Please contact us so we may examine your current policies, help you understand what is and is not covered, and adjust your policy, as needed. Contact Eric Rahn at eric@s2sinsurance.com or click here to schedule a free 15-minute consultation.