Medical marijuana is thought to relieve pain and suffering for people with a variety of chronic illnesses, from arthritis to diabetes and even cancer. As more states legalize both medical and recreational marijuana, the number of cannabis dispensaries is growing exponentially.
Like any small business, a marijuana dispensary faces a wide variety of property and liability risks. What’s more, dispensary owners face an increased risk of lawsuits based on inadequate labeling, tainted or toxic products, and unsafe handling processes.
And if you are a physician who recommends medical marijuana as an alternative to or in addition to traditional therapies, you face a whole set of unique professional liabilities.
Whether you are concerned about simple slip and fall incidents in your store, or product liability claims after someone consumes one of your products, you need to protect your business on all fronts.
You need a comprehensive set of business insurance policies that will cover you for all of your unique risks.
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Why Do You Need Dispensary Insurance?
Every small business owner has to be concerned about what can go wrong in the course of doing business. What if you were to experience a fire, a damaging storm, a theft, or vandalism in your dispensary? Would you have the funds to make repairs and get back to business, or would you be forced into bankruptcy?
Likewise, what if you are sued for some type of negligence? Someone can take a spill in your store and expect you to pay for his or her medical bills. If a customer is seriously injured, it’s likely you’d be sued and have to pay for additional damages and a ton of legal fees.
Worse yet, what if someone is injured, becomes ill, or even dies as a result of one of your products? As much faith as you likely place in your suppliers, you can’t control everything. And you certainly can’t control how every customer will react to consuming a marijuana product.
That’s why you need dispensary insurance. With a comprehensive set of insurance policies that are designed for your specific needs, you can get the coverage and the peace of mind you need.
What Does Dispensary Insurance Cover?
With changing laws and the explosion of marijuana-related business in recent years, an entire market of cannabis-related insurance products has emerged. Chances are, if you are in the cannabis business you’ll need to find appropriate coverage from an insurance company that specializes in risks like yours.
That means working with an independent insurance agent who can find the right carrier and the right policies to protect the very unique risks associated with running a dispensary.
You’ll need several insurance policies to make sure that you have coverage for all of your property and liability risks.
General Liability Coverage for Dispensaries
Commercial general liability (CGL) insurance offers broad coverage for lawsuits related to your premises, operations, and products. This includes coverage for things like simple trip and fall incidents to more complex situations.
It’s likely that your state will require you to show proof of general liability coverage in order to obtain the appropriate licenses to open a dispensary. A commercial general liability policy for dispensaries pays for your legal costs if you are sued, as well as any direct expenses for the injured party.
But it’s important to know that certain types of claims are usually excluded from CGL coverage including professional liability claims (claims that you have somehow failed in providing professional advice or services), pollution liability claims, and employment-related claims.
Property Insurance for Dispensaries
Commercial property insurance protects your physical assets, including your dispensary’s inventory, furniture, fixtures, and equipment. It should also cover any improvements you’ve made to your physical space if you lease it (i.e., tenant’s improvements).
You’ll need property coverage in the event of a fire. Your inventory is highly flammable, making you even more susceptible to quick-spreading, damaging fires. It also covers property damage after severe storms, vandalism, and even theft.
Be sure that your property insurance includes coverage for your inventory including when it is in transit from a cultivation facility (if applicable) to your dispensary.
Included in your property policy is business interruption insurance. It covers lost income and ongoing expenses after a covered event like a fire or severe storm. It allows you to stay afloat and pay your bills if you have to close to make repairs, replace inventory, or even find a new location.
Why is Product Liability Insurance Important for Dispensaries?
As a cannabis dispensary, the risk of getting sued for some type of product-related negligence is high. Someone could have a bad reaction (anything from an upset stomach to hallucinations) to an edible product.
Others may become sick or sustain burns after using a vaporizing or smoking device that you’ve sold. The possibilities are endless.
And while you may have done everything in your power to prevent an injury or illness, sometimes even unfounded claims can land you in court, forcing you to spend hundreds of thousands of dollars to defend yourself.
That’s why you need product liability insurance. It covers your legal defense costs (attorney fees, court costs), as well as any payouts to the injured party. It’s important because even if you do not grow or manufacture the products you sell, anyone who is involved in bringing a product to market can be sued if someone is injured as a result.
If a product is tainted or defective, or you simply failed to provide adequate warnings or instructions, you can be held financially responsible for any negative consequences.
You will have to work closely with your independent insurance agent to find an insurance company that specializes in cannabis-related business insurance. You’ll want to ensure that your general liability policy or another standalone policy adequately covers any product risk that you might have.
A Note About Medical Marijuana Malpractice Coverage
Physicians who recommend medical marijuana as an alternative or a complement to traditional therapies may be wondering if their medical malpractice insurance covers them for any claims related to patient use of cannabis.
Remember that you can be sued for anything even if the claim is unfounded. But even frivolous lawsuits come with a cost to defend yourself or get the case thrown out.
If you are sued because of a medical marijuana claim, you likely won’t be covered by your traditional malpractice insurance. But there is an emerging market for medical marijuana malpractice insurance specifically for these circumstances.
It covers physicians who recommend medical marijuana therapy where it is excluded from their traditional malpractice insurance.
Before recommending any medical marijuana to your patients, it must first be legal in your state. You’ll need to check with your malpractice insurance carrier to find out if they cover claims related to medical marijuana and inform them if you intend to use medical marijuana in your practice.
Because most malpractice insurers will not cover you for non-FDA approved products, therapies, or procedures, it’s unlikely that your traditional insurer will cover you.
In most cases, you’ll need to get coverage from a surplus carrier who specializes in medial marijuana malpractice insurance or other cannabis-related business insurance.
What Other Dispensary Insurance Do You Need?
In addition to basic property and liability insurance, you will likely need to purchase several additional insurance policies in order to adequately protect your dispensary.
Ask your independent insurance agent about your need for:
- Commercial umbrella insurance provides excess liability protection to any of several other policies you might have. If a product liability case leads to a financial judgment that exceeds the limits of your commercial general liability policy, your commercial umbrella policy kicks in with higher coverage limits.
- Workers’ compensation insurance is typically required for any business that has employees. It pays for lost income and medical expenses for employees who are injured on the job. If an employee is injured while simply lifting a box or climbing on a ladder, workers’ compensation insurance pays for related medical costs and compensates the employee for time away from work.
- Crime coverage protects your business if an employee or a group of employees engage in theft, forgery, or fraud that damages your business. It also offers coverage in cases of shoplifting and vandalism.
- Sign coverage pays for damage to outdoor signs that are not attached to your building when the damage is caused by weather, vandalism, fire, etc.
- Utility interruption coverage provides income protection if you are unable to operate due to a covered utility (water, electrical) interruption.
- Employment practices liability coverage protects you if a current or former employee sues you for discriminatory employment practices.
How Much Does Dispensary Insurance Cost?
Every business has different insurance needs and therefore different insurance costs. What you’ll pay for your dispensary insurance depends on your individual risk factors such as:
- The value of your inventory
- Whether you own or lease your building
- Where your business is located
- How many employees you have
- The types of products you sell and the risk associated with them
- The fire, weather, and crime risk for your business and neighborhood
An independent insurance agent can help you search for policies that cover your unique needs and fit within your budget.
Find and Compare Quotes
An independent insurance agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Agent
Our agents simplify the search process for finding the right dispensary insurance. They’ll walk you through the handpicked policy options and explain the details.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get, but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can omit important coverage that will leave you devastated if something unexpected happens. And they can leave out cost saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now and get one-on-one consultation and affordable options for the best coverage for your unique needs.
TrustedChoice.com Article | Reviewed by Paul Martin
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