The emerging cannabis market has created a new space for industry coverage. There are unique risks that come with cannabis insurance that shouldn’t be overlooked. If you’re wondering the difference between cannabis and hemp insurance, read our article explaining the differences here. But for now, let’s talk about the unique risks of cannabis insurance.
Cannabis and CBD products require a custom product liability policy for their manufacturers, retailers, distributors, cultivation, facilities, and more. This coverage applies to any business working to bring a product to market. These custom product liability policies help to defend your company against claims and allegations and to pay damages if your business is found liable if an incident were to occur.
These claims can vary, but some of the most common in the cannabis industry include:
- Bodily injury or property damage caused by a product misuse
- Product-related/manufacturing defects that result in some kind of loss
- Inhaled, edible, and infused products that may have caused illness
- Faulty/misused equipment (which includes vape cartridges, batteries, and lighters)
- Marketing/labeling misrepresentations
For these reasons, product liability insurance is essential to your cannabis coverage. Similarly, you may want to consider product recall insurance that would cover the costs of removing a defective product from the market, and further preventing third-party claims.
The National Association of Insurance (NAIC) acknowledges that companies might need to reevaluate their coverage when considering cannabis and hemp. With the rising popularity of different forms of cannabis (think edibles), there are mental effects that need to be accounted for with insurance risk.
NAIC claims that products like edibles, “increase the risk of product liability and safety recalls. The psychoactive effects of CBD raise the risk that products may be deemed mislabeled, misrepresented or harmful.”
Young people have shown more interest in illicit drug use in recent years, which could change the insurance services and risks available.
Some other unique risks associated with cannabis coverage to consider:
- Cannabis businesses are complex
- The market is constantly changing
- Policies are not on the same playing field
- Vaping products are muddling the market
Carriers have their own best interests at heart and only cover the safest bets to protect themselves. At Competitive Edge Insurance, we build your case with the carrier to ensure that you get the right coverage at the best price based on your real-world conditions. Learn more at our website today!