From cultivation to cash registers, cannabis-related claims can face special challenges.
When asked about the biggest exposures in the cannabis industry, Beth Ossino, claims manager at Golden Bear Insurance Company, pointed to theft and robbery.
During Insurance Journal’s annual Insuring Cannabis Summit, Ossino recalled a couple of instances of deva
Indicate losses for journalists, including thieves carrying a safe out of a business and robbers making off with huge amounts of product.
Beth Ossino
“We’ve had entire crops where, maybe the announced harvests 600 plants, [and] the next day, there’s a box truck that rams th
rough their roll-up door and steals all of the product,” she said. “They come in, and they’ll take whatever they can get their hands on.”
Sub-limits and specific protective protections on policies can mak
e claims tricky, Ossino said. Sometimes, policyholders are non-
compliant with protective protective advocates, such
like wired alarm systems or sprinklers. Record-keeping holes in a disk
Ensary's accounting can also become sticking points in business interruption claims.
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Hot Lights, High Risk
Michael Kirk, an underwriter at Cannasure Insurance Services, explained that from an underwriting risk s
tandpoint, LED lights are favorable to non-LED lights in cultivation facilities. Ol
-school growers may prefer the older lights, but bulb fires rank among the top of Cannasure’s concerns.
“I really haven't seen any LED fire claims,” Kirk said. “I’m sure there are claims out there as well, but they’re at such a lower temperature that it makes it a lot
ess risky when they're usin
g all LEDs. So, from our standpoint at Cannasure, if we’re insuring a cultivator, they have to either be 100% LED or fully sprinklered.”
Kirk believes that even though a mix exists today, all cultivators will use LED lights soon. Michael DeNault, cannabis practice leader at World Insurance Associ
tes, added that LEDs are becoming more prominent, but that while t
he temperature of these lights is not a concern, the temperature of their power sources can cause issues.
“They do get quite hot,” DeNault said. “If you go into a room that’s been … in the vegetative state, and those lights ha
ve been on for 10-12 hours, those drivers are really hot. The lights themselves are not, but the drivers are.”
Michael DeNault
DeNault said his team has seen lighting companies offer driverless systems and remote driver systems that situate the LED light power drivers outside of g
row rooms—completely removes the risk of the lights’ heat profiles and placing less strain on ventilation systems.
Kirk also highlighted how individually ventilated grow rooms can minimize plant losses due to fires. Smoke that damages crops between rooms can lead to a huge claim, he said.
“When we’re talking about large cultivation risks, that’s another one of the questions we always ask,” Kirk said. “Are these rooms individually ventilated, along with the fact that we’re always going to prefer LED.”