As more states legalize marijuana for medical and recreational use, the associated risks of increased cannabis use may start affecting individual insurance coverage.
The effects span across a number of insurance lines, including homeowner’s, auto and life insurance. There are number of issues that may arise when cannabis enters the equation, such as growing plants on your property, driving under the influence and qualifying for life insurance.
Here’s a look at some scenarios that could affect your insurance coverage.
Depending on the terms of the homeowner’s policy, loss of or damage to the substance itself inside the home may be covered. Some policies may not cover “contraband” or illegal property, and marijuana remains illegal under federal law.
Check the policy’s list of property not covered. Remember also that the insurance company will pay only the amount of the loss that exceeds your deductible.
Plants growing outdoors may also be covered. However, the insurance typically applies only to losses caused by select perils such as fire or lightning. It is common for policies to limit the amount of insurance that applies to any one plant.
Your coverage may be more limited if you are growing plants with the intention of selling the product.
Plants grown for business purposes are typically not covered. Policies often provide a reduced amount of insurance on property used primarily in a business, so heating lamps, climate control equipment and other types of property used in growing operations will have limited coverage.
Also, a structure separated from the house, such as a shed, greenhouse or detached garage, may be completely uninsured if a business is being conducted from it.
Homeowner’s insurance also covers legal damages if you are liable for someone else’s bodily injury or property damage. However, your policy may not cover injuries or damage resulting from the use of marijuana or from the conduct of a business.
Your insurance company may be particularly concerned if you are growing plants indoors. If the growing space does not have proper ventilation, there could be a build-up of moisture, leading to mold and mildew problems. Also, light sources that help the plants grow can present a fire hazard if not wired correctly.
Auto insurance policies commonly provide liability coverage and coverage for damage to your vehicle even if the driver was intoxicated at the time of the accident. In states where so-called “no fault” insurance (coverage that applies to your own injuries suffered during an auto accident) is offered, it might not apply if you were operating the vehicle while under the influence.
However, even if the policy provides coverage, a conviction for driving while under the influence of a drug will send your premiums soaring and make it more difficult for you to purchase coverage.
In some states, drivers with records of these offenses are forced to buy high-priced coverage from “assigned risk” pools of poor drivers. Your rates may also be higher If you work for a cannabis company and make deliveries with your personal vehicle.
Life insurers charge tobacco smokers higher premiums; they may eventually hike rates for marijuana smokers as well. They might do the same for individual health insurance policies.
In addition, while medical marijuana use is now permitted in many states, most do not require insurers to cover its cost. Consequently, there is almost no coverage for these prescriptions.
As the laws evolve, so will insurance coverages. Some companies may decide to cater to personal marijuana growers by offering them special coverages for equipment, plants, and so forth.
In the meantime, your coverage depends very much on where you live and what your particular policy says.
BGES Group’s office, located in Larchmont, NY is a full service insurance agency offering, Property, Liability, Umbrella Liability, Business Auto, Bid & Performance Bonds, Inland Marine, Worker’s Compensation, New York State Disability, Group Health, Life insurance, Personal lines and Identity Theft.
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