Sponsored blog post By Manuel Cuaron, OG Cannabis Insurance
Our agency decided to enter the world of cannabis insurance in August of 2016. We made this decision partly because we saw the financial potential of the industry but mainly because we wanted to contribute our talents and services as insurance agents to a culture and industry we believed in. An industry we knew that could one day be seen on the same level as any “main street” business if given the opportunity. Our goal has always been to provide an executive level of professionalism to our clients and to provide the most up to date solutions in protecting their businesses.
While most insurance companies continue to exclude cannabis risks in their offerings, we are proud to say the few insurance carriers who have stepped up to insure cannabis have done a great job of understanding the operations of licensees and their risk exposures. Although cannabis insurance products have improved, gaps in coverage and limited availability for certain risks is still an issue for our clients.
As someone who is championing for each licensee to succeed, I thought I would share some insight in areas of risk cannabis businesses have in order to help protect their business.
Since 2016, we have seen two admitted insurance companies offer coverage for California cannabis risks with a third option being offered soon. Three standard workers comp carriers began placing coverage along with the various State Funds each state offers.
More insurance companies are offering commercial auto coverage to states where cannabis is now legal. For the more complicated areas of coverage like Directors & Officers Insurance and Employer Liability Insurance, the insurance industry is being cautious in extended commonplace coverage with premiums and terms being offered at rates much higher than typical policies by comparison.
This is the area of insurance that can get ugly really fast.
An exclusion to a policy removes coverage from the insurance. Each cannabis approved insurance company has their own specific exclusions and no two policies are the same. When an insurance policy has a defined and specific exclusion within it the insurance company will have no duty to defend such claim. This means your company will be on the hook to investigate the claim, prepare and defend yourself in court and possibly settle financially.
Here is a sample of some of the exclusions to be aware of: class action, cancer, redefined bodily injury, vape pens, health hazards, and criminal acts.
Employee vs Employer – (Employer Practices Liability Insurance)
Managing employee workplace environments is a balance of people management and navigating law with employer responsibilities. Both areas even the most seasoned business person or company might find difficulty in doing. The reality is even with full-time HR management in place handling high turnover rates and the difficult job of firing and hiring HR cannot prevent employers from claims of employee misconduct. If a current or former employee claims discrimination or harassment, wage theft or other unlawful acts the company having coverage in place for these claims should be essential for cannabis operators.
While most people in the cannabis industry would agree that consuming cannabis is safe, the potential for product liability claims are massive. With the limited clinical research on cannabis long term physical and mental use and the legal ability to consume it means claiming a cannabis product is dangerous or caused injury or illness has yet to be tested in court. Although we haven’t seen lawsuits many in the industry thought we would see as of yet, my feeling is this will be the next wave of problems for cannabis operators with class-action status and illness being at the forefront of claims.
Delivery & Distribution Risks
High employee turnover and limited insurance options are driving up commercial auto insurance costs. Due to COVID-19 we have seen delivery operations grow rapidly and expand and with this the cost to cover more drivers are pushing down much-needed profits. While background checks are a best business practice at hiring, driving records checks should be done as well to verify any impact on premiums a new hire may have.
OG Cannabis Insurance began offering cannabis insurance in 2016 and quickly has become a recognized industry leader. From the beginning, our agency’s focus has been on developing an in-depth understanding of cannabis insurance products as well as being up to date on state and local cannabis license compliance requirements. Since then, we have worked with local municipalities on the shortfalls of cannabis insurance and have worked with insurance carriers who were interested in insuring cannabis but needed to know more about cannabis risks.
We decided to bring our talents and services to cannabis because we believed for the industry to thrive it must have access to knowledgeable and credible professionals representing cannabis. It is our goal to provide the cannabis industry with the most trustworthy and knowledgeable staff.
Manuel started in the insurance industry for an independent agency located in Chino CA in 1998 and was with that same agency until it sold in 2008. As his career grew, so did his knowledge of insurance products, coverage, exclusions, and terms. He began to sell Commercial Line’s policies including Workers Compensation, General Liability, and Property Insurance. His clients include Trucking Companies, Bail Bond Companies, Staffing Companies, and Contractors just to name a few industries.
When the agency he worked for sold, he started his own agency, So. Cal’s Best Insurance in 2008. Manuel has been married since 2008 and has 2 boys who keep him busy at home. He is an avid sports fan who loves boxing, the Dodgers and Lakers.
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