September 10, 2021
5 Reasons You Need CBD Business Insurance
For your Cannabis related business (THC too!)
#1. To protect yourself and the end use consumer in case of an incident or “loss”
If a consumer (animals included) uses your product and they got sick, hospitalized, or caused a loss due to the consumption of the product, then you would want to have insurance in place. A consumer will point the finger at where they got the product and seek compensation for damages; often this is targeted at hospital bills, loss of capability of working/income losses.
To prevent your company from being liable or sued you would want General Liability including Products Insurance for your CBD/THC business and products. This will kick in to pay out damages so you don’t have to out of pocket.
This also climbs the ladder of insurance for the supply chain so we can figure out where things went wrong and where liability resides. This is subject to a deductible which is standard to all lines of insurance. We do see a lot of activity around first-time users, or people taking too much of something. It’s important to have directions for users on the product, so they know where to start, as well as all required label wording and disclaimers.
#2. To protect your assets in case of an accident
Technically insurance is “prepaid legal” which is a term commonly heard and used in the insurance industry. When a company intends on filing a claim or lawsuit they seek compensation for losses; which can be property, physical loss, mental, monetary, or even intangible such as time; which can be calculated to assume what a loss is worth.
To avoid surprise lawyer fees you can always secure insurance for your CBD or THC distribution, lab, grow, or retail dispensary, analytical testing labs, transportation, open consumption lounges, and bars, etc. By having insurance you will have typically 1 million dollars worth of financial backing per claim made. Also known as “Claims Made” form on the insurance policy; of which most forms are claims made at this time. There are also Occurrence forms that pay out the damages per occurrence and are a little more broad/flexible for coverage.
In a case, if you don’t have insurance you will pay damages out of pocket on top of legal fees if you choose to legally defend yourself.
Insurance is a good tool to prevent looking at these harsh conclusions and to save money in the long run before something happens or it is too late!
#3. To protect your property
Property is typically the most expensive asset that a company will hold.
This also points at this being one of the most important lines of insurance to hold as a cannabis company. Whether that property is a building structure itself, inventory, equipment, crop, cash assets, income or loss thereof, vehicles, property in transit, goods in process, Etc.
This is where the majority of the losses/claims are reported in insurance for Cannabis, REC, MED, or CBD-based businesses. With that being said carriers will require a central station burglar alarm or security system that is active at all times in order to payout. Also known as protective safeguards. You will want to ask your agent or carrier if you have checked all the boxes for the required in order to have an eligible trigger or payout. This is how you avoid got ya’s! Always make sure your security measures are active, up to date, and connected to a central station.
This is a strict requirement for THC-based companies; grows, labs and dispensaries are required to have this by law. A property loss without insurance can put a business out of business. We have witnessed this many times!
#4. To protect your employees or yourself during job duties.
Workers Compensation insurance is legally required in a lot of states so this is something you would want to check into your state’s stance on. In CO, for example, this is legally required and if not in place the state will implement it for you.
If you have any W2 Employees or workers; anyone you pay wages to outside of being 1099 then this is for you! It is a companies responsibility to insure and protect the workers and activity around their employees. Workers Comp Insurance would kick in for any loss that you or an employee might have on the job site.
A real example(s) of this I can share would be a lab technician dropping a roto-vap and cutting themselves and needing immediate medical attention, we have seen claims where screwdrivers go through hands, burns/cuts are very common, ambulance rides for getting something in an employees eyes; solvents, oils, etc. We have seen physical damages to people from theft cases that have gotten violent. Slips, trips, and falls are also amongst the most common. Without this insurance, in place, an employee can sue your company and seek compensation for damages that typically lead to loss of wages due to an employee temporarily or permanently being unable to work because of the loss.
So if you rather be protected and not pay out of pocket in a case as such it is important you get Workers Compensation Insurance! This is also typically the most cost-friendly line of insurance.
#5. To protect your reputation and provide credibility and peace of mind when choosing to work with your company
Any credible contract or company will ask to validate your Certificate of Insurance at some point in time, whether it’s a business, trade show, vendor, landlord, the state compliance division Etc.
To be seen as a legitimate company. This is usually when companies face the need of buying insurance. You have heard the term “licensed and insured” which means I am licensed to do what I am doing and insured for doing it. Every company with a business filing (LLC/Inc/LLP/Sole Proprietor etc.) should be licensed and insured. This is where we start with General Liability Insurance.
This is the first step and line needed for any company that exists. This includes the products liability limits within the General Liability which most people think are separate lines of insurance. General Liability contains the “Products and Completed Operations” limits of typically 1 Million. Which is what people refer to as “Products Liability” so it’s really two peas in one pod. There are also other limits and coverages applied such as personal advertising injury. Personal advertising and injury claims and losses seem to be on the rise as the market gets flooded and causing a lot of competition. People often don’t play nice and cause issues when they feel the pressures of other companies interceding on the preexisting market space. Everyone wants their piece of the pie and share of the market space to exist. But it’s important that people play this game ethically because there are circumstances and triggerable coverages if this is not the case. If losses occur because of this activity this can be claimable or trigger coverage.
A real example of this we have seen is social media wars which is the most predominant area for this activity. It’s important you aren’t defamed, slandered, or libel on any accounts or terms. As your name and reputation are key. Now, this would have to cause loss to be claimable and can be proven; cant be a “he say she say” scenario. Your company will want insurance to show credibility, protect your reputation, and show that your company is professional and legitimate to do business or work with. The first sign I look for to determine a companies credibility is checking to see if they have insurance. That way I know it is safe to do business.
It’s HIGHLY important that you are properly insured.
Call Cannabis Insurance Business today at 720-999-3345 in order to undergo a free insurance review or second look over things.
We would be happy to broker your insurance to all applicable options and carriers to ensure you the most competitive and appropriate setup for your insurance needs. Let us do the shopping for you!
Ready to learn more about insuring your cannabis & hemp products? Then contact us at (720) 999-3345 or at info@CannabisInsuranceBusiness.com. You can also learn more about CIB at https://cannabisinsurancebusiness.com/about
Colorado-based and pushing the industry further one step and state at a time. Proudly serving all 50 states.
Pushing the industry further one step and state at a time. Proudly serving all 50 states. – Cannabis Insurance Business of Loveland Colorado
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