In light of recent news, businesses that manufacture, sell or distribute products containing cannabis or cannabidiol (CBD) intended for vaping need to get a secure grip on their product liability insurance now.
We are seeing a lot of activity around this topic from clients in the supplement, cannabis, CBD and vape markets.
So I recently sat down with Bolton’s cannabis business insurance specialist Corey Tobin to put together a few important pieces of information these types of businesses need to be aware of.
First, we can confidently tell you there are not a lot of insurance carriers available that provide true, actual liability coverage for your business and products.
As with any industry, a limited supply with high demand will tend to lead to higher costs for the products.
There are various factors that affect the pricing of a liability insurance policy, including (but not limited to) the availability of such a policy.
There are insurance carriers out there that will provide a quote for a cannabis, CBD or vape company, but hidden deep within the policy itself are potentially destructive exclusions which eliminate or severely restrict the coverage available in the event of a lawsuit.
Here are overviews of some exclusions we have seen on CBD, cannabis and vape liability policies:
- Scheduled Products: Must have each product named/listed on the policy in order for coverage to apply
- Exclusion for claims arising from the sale/distribution of product over state borders
- Vape Exclusion: Product(s) or devices originating from (various manufacturers)
- Vape Exclusion: No coverage for products sold to minors
- E-Cig, E – Cigarette, electronic cigarette, electronic smoking device, nicotine vaporizer or any other product that is powered electrically or has a battery, including an atomizer or cartomizer, or a cartridge or other delivery device utilizing a liquid nicotine solution and which is intended as an alternative to traditional cigarettes;
- Cannabis Products is defined in this policy as “Any product or good containing any amount of (THC) or any other cannabinoid, regardless of whether the THC is natural or synthetic”
- “This insurance does not apply to… Bodily Injury from “cannabis Products”… (found in a “cheap” CBD Liability Policy)
If not properly addressed or disclosed, these exclusions could lead to a denial of coverage, which can have disastrous implications.
With CBD alone, you are limited to roughly three viable liability Insurance options. Now toss some vape products into the picture (eLiquid, devices, chargers, etc.) and that narrows it down to one option—or maybe two on a good day.
With the extremely narrow marketplace at hand, the buyer (yourself) must switch from the traditional mindset of purchasing based solely on lowest price and focus more on the quality of the policy being purchased.
Focusing on price alone will tend to have high a probability of leading to unfavorable outcomes in the event of a liability claim.
Further, choosing to work with the right insurance broker can help eliminate a lot of the guesswork on your end which ultimately saves time. “Time is money.”
If you would like to get our opinion and analysis of your current liability policy, we are happy to do so! Just reach out.
If you’re at all curious, concerned or have questions about your own insurance or if you want to make sure you have the proper coverage in place to protect your cannabis, CBD or Supplement business from a loss, please don’t hesitate to contact us.