LOOK CAREFULLY AT YOUR POLICY TO SEE
IF THERE ARE SO-CALLED “PROTECTIVE
SAFEGUARDS” CONDITIONS. THESE
CONDITIONS STATE THAT IF YOU DO NOT
HAVE A FIRE SPRINKLER OR ALARM AND
PERHAPS OTHER PROTECTIONS, THE
INSURER DOES NOT HAVE TO PAY.
How much should you insure your property for? This is a
difficult question that often creates problems for owners, many
of whom believe that they should insure the purchase price or the
market value that they could sell the building for. This is a mistake
as the replacement cost should be looked at. In recent times,
building costs have gone up considerably for steel and other
building supplies, and the cost to rebuild or replace should be
closely analyzed. One of the most common underinsured claims
we see is not having enough insurance limit on the building.
Some municipalities require this, but even if they do not, you should
worry about the value of the business when it comes to choosing a
liability insurance limit.
In Michigan, $100,000 in liability coverage is required by the state
statute, but this will not go very far to protect most businesses. For
example, if there is a fire which causes a death of a tenant working
in a cannabis business in your building, $100,000 is not likely going
to be enough to protect your assets.
Plants such as cannabis have unique issues when it comes to
insurance. Should they be insured for the ultimate sale price? The
costs to produce? There are no black-and-white answers here,
and the cannabis business owner should carefully discuss this
with their agents.
In Michigan, the law requires that those applying for a medical
marijuana license maintain $100,000 in liability coverage,
including for claims arising out of products. This means that to
qualify, you must have products liability coverage which not all
insurers writing in this industry will offer. You want to be sure
that you have the appropriate coverage in place to not only
satisfy the state but also to protect your assets. You would want
to buy higher liability limits than those required by the state.
Michael S. Hale
Michael S. Hale, JD, CPCU,
AAI is a principal in the firm
of CannaCover U.S., LLC,
an insurance agency which
offers insurance and risk
management services for
companies in the Cannabis
industry. He can be reached
at mhale@canna-cover.
com / 248-321-8941.
For medical use only.
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