April 15, 2021
This is, to no surprise, the #1 question we get about cannabis insurance.
This depends on many factors;
1. The cannabis insurance policy (General Liability w/ Products Ins.) Is typically rated off how much a company makes. Gross Revenue Basis; Total sales. The insurance carriers do this in a way to check and balance the fairness/ costs associated with the risk of a policy. Think of it this way; the more a company makes hence more product pushed and higher risk or chance of loss the more the premium or cost of the policy will be. The General Liability + Products Insurance is the first place and piece of insurance for a company. This is the starting point and what leases, landlords, contracts, trade shows will validate. You can typically tell if a company is credible if they have this in place and this can be validated using a Certificate of Insurance. In the short, we have monitored this pricing pattern at Cannabis Insurance Business across the board. This policy started in at 5-7k leaning heavily on the 7k high per year. This over the past (3) years has fallen to the average starting premium of 2,500 to 5,000 a year. Base Premium. More carriers and options are causing a more competitive market over time and will continue to do so.
2. The next level of insurance to discuss costs on will be Commercial Property Insurance. This is priced aka rated on the property values or TIV (to insurance vale) This is easier to explain as the costs of insurance are rated off the values of your property. What is seen as property is the building and the contents within including inventory. Buildings are rated off Reconstruction costs in most cases. The biggest misconception is insuring a building for market value as this will be much different than reconstruction costs. Ex; a building with 10,000 sq feet x 100/ per sq foot Reconstruction cost (RCV) would be 1,000,000 in building coverage limits. This can vary based on the costs of reconstruction in your area. For a ballpark on commercial property, it can be as low as 600-1200 a year for being a tenant to 5,000 – 10,000 years for building owners with equipment and property within.
3. Workers Comp is really the last piece to consider costs on. This is rated off risk code; or how risky the job description has been rated off. The good news with this insurance line is that it is hands down the cheapest and most cost-friendly line of insurance. For example, a lab with 2-3 extractors will only run on average of 1200/year. This is also the easiest insurance to deal with and probably the most used and utilized insurance. Employee and payroll count depicts the overall costs of this policy. I would expect 600 low and 5,000 high depending on employee and payroll count/size.
The layers to the cannabis insurance costs of insurance are as follows:
The meat of the policy cost starts with the base premium. From there we have taxes and fees applicable to every policy. And from there if you break the policy into payments, there is an APF or financing fees (typically an additional 500/year or 55/month as these policies are paid as follows in a payment plan.)
If you choose to pay the policy in payments you will put 25% down + taxes and fees. This is called minimum earned and is guaranteed with no refund by the insurance company. The rest of the premium is paid in installments on a 9 pay or 9 month plan. Since 25% of the year is 3 months then 9 months or the other 75% is to follow. There is no 12 pay monthly plan at this time for most carriers as this is in non admitted markets and typically uses a premium finance company. Or 3rd party that handles the payments with the insured and the carrier direct. The Agent handles the down payment only in this approach.
The agent makes a 10% commission on the base premium average this on average for the base premium only. The taxes and fees associated, especially if financing can add up! So if you’re trying to save money you can always do so by paying the policy annually in full.
A lot of companies and Agents are flexible with the APF or the financing costs associated so always ask questions and leverage if you can!
Work with an expert that has access to multiple carriers and options and have your agent validate these across the board so you know you are being properly brokered. There are 5 carriers right now and options worth considering what is best for you. Let us at Cannabis Insurance Business shop every applicable option for you to ensure the best setup!
Request a free quote today to protect yourself tomorrow. We are your most aggressively priced option in Colorado!
Want to know more about who is behind Cannabis Insurance Business, then we invite you to meet our CEO, Tyler Cline.
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
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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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