Understanding Your Cannabis Building Insurance Needs

The right business insurance for your cannabis-related business (CRB) can really save your green — both your plants and your money. 

Despite marijuana being a schedule 1 substance (making it federally illegal), states have pushed past this outdated way of thinking to realize its medicinal and economic power. 

Economically, the legal cannabis industry has exceeded $20 billion in global revenue, growing exponentially with legalization trends. All that to say, insurance can seem difficult to understand when trying to align this newly legal and risky industry with dated insurance options. 

However, don’t let this deter you: cannabis operations need to be insured like any other business. Being in a legally gray area in the United States doesn’t lessen the potential risks it is exposed to as a business. Fires, theft, blackouts, lawsuits — the list goes on. Although it might be overwhelming to think about, not thinking about these things doesn’t stop them from happening. 

No matter what part of the industry your business participates in (growing, processing, the retail side, etc.), insurance is an absolute must-have. Like in any other business, insurance protects your business’s future by preparing for the worst. 

Your building, especially, needs protection from the brunt of natural disasters and property damage. You’ve put a lot of time, resources, and money into your CRB, so be sure to safeguard it as best you can with the best property insurance possible. 

The best way to start is to know what you need. Let’s take a look at some common insurance solutions cannabis business owners can benefit from the most. 

If at any point you’d like any pointers on insuring your cannabis business, drop us a line. Our team would love to hear from you.

Commercial Property Insurance for Cannabis

Whether your business is growing marijuana plants, processing CBD products, or selling cannabis products at a dispensary, your business property is where it all happens. Each type of marijuana business comes with vulnerabilities and insurance needs. Additionally, your landlord and lease or your mortgage provider may require your commercial property insurance.  

Commercial property insurance is first and foremost on every cannabis insurer’s list. Whatever business you’re in, your property is not only the building itself but its contents.

Take a look at the following equipment that you could have to replace if your building is damaged: 

• Grow House: Climate-controlling equipment, agricultural equipment, expensive chemicals, and climate-controlled storage.
• Processing and Manufacturing: Climate-controlled storage, lab, and computer equipment. 
• Dispensary: Computers, POS terminals, display cases, security equipment, and climate-controlled storage containers.

Commercial property insurance gives you coverage to replace these expensive necessities in the event of damaging circumstances. Several things will be taken into account when curating your specific coverage. 

What Cannabis Property Insurance Covers for CRBs

When insurance shopping, commercial property may seem like an expensive add-on, but it covers so much more than just the building: 

• The property the building is on 
• Equipment and tools
• Inventory
• Furniture and decor
• Personal property on site

What Variables Impact Your Commercial Property Coverage

Several things will be taken into account when curating your specific coverage. 

Location: There are always hazards particular to where your business is located. It could be the weather (perhaps your state has frequent tornadoes or ice storms) or the neighborhood (crime rates and previous risk management statistics are all factored in) that influence your coverage costs. 

Building size and age: How big or small your CRB will impact your coverage, as well as its modernity. Both influence the level of risks that insurance carriers take on when they insure your business. 

Type of CRB: This will determine what kind of coverage you need and how many insurance options you may need to add to better protect your business. Growers may require agricultural protection like crop and stock protection, whereas a dispensary will need to focus on solutions like general liability and property insurance. Whatever type of CRB you run, your insurance solutions should be catered to it.

What Commercial Property Insurance Doesn't Cover for CRBs

Let's take a look at some common occurrences that are not covered by commercial property insurance. Being clear on what your commercial property insurance covers prevents you from being caught without the right coverage. 

Typically, commercial property insurance does not cover the following by default:  

• Theft
• Business Interruption
• Stock/Inventory
• Mobile/Delivered Goods
• Damaged Customer Property/Bodily Injury

Many of these things are covered by different policies and can easily be bundled with your commercial property coverage. If your CRB needs any of these insurance solutions, they’re attainable with good underwriting.

Coverage Exclusions on Commercial Property Insurance

Every insurance plan has fine print, and it's easy to get lost in it. Typically, even for the best commercial property insurance you can buy, there are coverage exclusions. 

Coverage exclusions represent provisions in your policy to outline circumstances that specifically are not covered. 

Take a look at these commonly mistaken coverage exclusions that can leave CRB owners like you vulnerable: 

Weather Damage

Earthquakes, hurricanes, tornadoes, wildfires — if your CRB suffers damage from a natural disaster, general property insurance likely won’t cut it. Rest assured, if you need coverage for any weather-related event, you can add a coverage endorsement or floater to modify your policy for your needs.

Power Damage

Short circuits, power outages, and power surges can affect more than just your business operations. They can destroy your business by damaging or causing irreparable devastation to your equipment.

That’s where an equipment breakdown endorsement covers your damage and any costs associated with the damages. Chances are, your CRB contains a great deal of important and expensive equipment. 

Whether you’ve got a grow with expensive climate-controlling technology or a dispensary with irreplaceable storage and security systems, this endorsement can protect you. Replacing just one disrupted unit can threaten your business with costs you may never see coming.

Commercial Auto

Your commercial property insurance policy might provide coverage for the office, warehouse, and retail space. However, despite parking your cars on the premises, your company’s cars won't be covered. Even though commercial vehicle and property insurance may be bundled together, they are still two separate policies.

So whether you’ve got one delivery vehicle or a fleet of them, be sure to protect your employees and your business by having a commercial auto policy in addition to your commercial property insurance.

What impacts the cost of commercial property insurance for cannabis?

The cost of insurance is determined by many factors — the size of the business, location, type of business, and many more. 

Commercial property insurance for your CRB depends largely on the type of business your CRB is in. Dispensary, grow house, and distributor all come with different potential risks that your policy will cover. Your policy, coverage limits, and payments will depend on various factors. 

Use of the Property

Your CRB and its business type will impact the coverage you need and the cost you end up paying. After all, the risks associated with dispensaries are different from those of grow houses. 

Size

Building square footage, lot size, and even acreage all have a role to play in how expensive your insurance is. 

Location

Location is a huge part of your insurance costs. Crime rates can dictate how high or low risk your business is regarding the damage that calls for insurance payouts. Equally, being close to a fire station, police station, or hospital can lower your insurance coverage costs too. 

Building’s Construction 

The age, construction, and structural integrity of your CRB’s building can help or hurt your insurance coverage. For instance, newer buildings or buildings made with less flammable materials (brick and stone) cost less to insure because the potential risks to the commercial property itself are lower. 

Can I combine my commercial property insurance with other insurance solutions? 

If there are insurance coverage options out there, you can bundle them. The best part about having an independent broker on your side is that they can find all the ins and outs of policies, riders, and endorsements to make your insurance work for you. 

You shouldn’t have to work to fit into a cookie-cutter insurance policy — your CRB will never be properly covered with a general policy. Suffice it to say, an independent agent can make insurance coverage fit your business — not the other way around. 

Commercial property insurance is so necessary for business owners that it can be bundled with other priority insurance coverages. For instance, many insurance brokers can bundle general liability insurance with commercial property insurance. 

General liability coverage covers a lot of bases that commercial property insurance doesn’t. Customer injury, third-party property damage, advertising injury, etc., can all be protected against with general liability insurance. 

Many states or even business contracts require general liability coverage, so bundling these two is a perfect fit. 

Hopewell Helps Your Green

So the cannabis industry is in a state of flux — but that hasn’t impacted your ability to get a successful business off the ground. Your grow, processing operation, or dispensary can flourish even in this chaotic environment. 

Any insurance company will be reluctant in its dealings with a CRB because they consider them to be high-risk. As such, insurance options can be expensive, impossible to attain and offer minimum coverage options. That’s just the insurance industry being cautious. 

An independent insurance broker like Hopewell will fight to get you what you need to protect your CRB and safeguard its future. We will negotiate, advocate, and research for you, so you don’t have to. Let us use our relationships with carriers, both new and old, to your advantage.

You’ve got a business to run, green to earn, and green to grow — let us deal with the insurance. Get started with a free cannabis business insurance estimate today to cover your CRB.