Weed Out of the Risk: Key Traits of a Top Cannabis Insurance Broker

Every business needs comprehensive insurance coverage, but this is especially true in the cannabis industry. Our industry is rife with red tape, regulations, and shifting rules. Having the proper risk management plan is vital to your success, and insurance is a key piece of that. The types of policies your business needs depend on whether you’re plant-touching, how many employees you have, how your company is structured, and what services you provide.

Working with an insurance broker can help you formulate the right umbrella of cannabis insurance coverage for your business. A cannabis insurance broker lightens the load by doing the research for you: examining the possible companies and policies, and piecing together the right solution for your company. While many cannabis companies need similar types of coverage, your liability limits and policy premiums are unique to your business, and your coverage umbrella must be customized to them — not the other way around.

An important distinction to draw is that an insurance broker is not inherently a broker of record. Which kind of cannabis insurance broker you need is dependent on your company size and comfortability navigating the world of cannabis insurance.

General liability insurance

General liability offers broad protection against some of the most fundamental risks cannabis companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.

Product liability insurance

Cannabis companies offering tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Product liability insurance covers defense fees and settlements, even for ungrounded claims. This coverage is particularly critical in the cannabis space as testing and manufacturing aren’t regulated at the federal level.

Cyber liability insurance

Cyber insurance protects companies from third-party lawsuits relating to electronic activities (i.e., phishing scams). Plus, it offers many recovery benefits, supporting data restoration and reimbursement for income lost and payroll spent.

Crime insurance

Whether employees steal from you, a thief robs your armored car, or you receive a forged check or fraudulent wire transaction, money theft happens in many ways. Crime insurance guards your cannabis company against damages from these particular crimes.

Directors and Officers insurance

Shareholders, competitors, investors, etc., can sue a cannabis company’s executives, putting their personal assets at stake. Directors and officers (D&O) insurance protects these assets from lawsuits alleging leaders of wrongful acts managing the business.

Property insurance

This policy is first-party coverage that protects the Total Insurable Value (TIV) of your operation’s property, reimbursing cannabis companies for direct property losses.

Workers comp insurance

Employers are typically responsible for their medical costs and lost wages when employees sustain work-related injuries. This policy covers these expenses, protecting employees while simultaneously keeping cannabis companies running smoothly.

Employment practices liability

Cannabis companies with any number of employees face the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects cannabis companies against lawsuits related to employment practices.

Crop insurance

Crop coverage is first-party coverage that protects cannabis companies against the loss of a crop due to peril. For example, this policy would respond if lightning struck your crop and set it on fire, destroying it. These policies are specifically written to cover the entire lifespan of a plant, from seed to finished stock.

Whether you’re looking for a cannabis insurance broker or broker of record, there are a few key traits that a high-quality broker has.

In-depth Industry Knowledge

A good cannabis insurance broker understands the cannabis industry because they work within it every day. Cannabis isn’t just one of their client fields, it is their main focus.

In order to confidently hand over the insurance reigns, you want to work with someone who has in-depth cannabis industry knowledge. This typically includes experience working within the cannabis industry, a firm understanding of the state and federal cannabis laws you have to adhere to, and some familiarity with the risks associated with cannabis products and consumption.

Experience and Specialization

Cannabis is a specialized field that requires time, patience, and research to fully understand. There’s no replacement for hands-on experience navigating the intricacies of the cannabis market. Look for a broker who has experience helping cannabis businesses; the more years under their belt, the better.

You can also take it a step further and ask your prospective broker if they’ve engaged in any specialized training or certification courses for cannabis insurance to further their knowledge. Insurance brokers can apply themselves to continuous learning just as in every other field.

Access to Quality Insurance Carriers

Your network is your net worth, and you want people in your network who have strong networks of their own. A high-quality cannabis insurance broker has positive relationships with multiple reputable insurance carriers who offer cannabis coverage. Not all carriers are willing or able to insure cannabis businesses, and the last thing you want is a lapse in your coverage because of a misunderstanding. A good broker knows the right carriers for cannabis coverage because they’ve been working with them.

A key piece of that is knowing multiple reputable carriers. A good insurance broker doesn’t just help you get covered, they bring you multiple, competitively priced quotes offering comprehensive coverage so you can choose the best fit for yourself.

Risk Management and Loss Prevention

Your insurance broker should act as an extension of your team, proactively helping you create a robust risk management plan. Working with multiple clients in the same industry over a period of time gives insurance brokers an insider’s look at the risks and challenges faced by cannabis businesses, which means they should also have the best advice for minimizing risks and covering exposures.

This advice can take the form of helping you create a risk management plan, identifying gaps in your existing coverage, or providing resources to help your team stay safe and compliant.

Client-Focused Approach

An insurance broker is paid based on your first-year policy premium — but that shouldn’t be their main motivation to help you get covered. Top cannabis insurance brokers take the time the dive into each client’s business, understanding what makes them tick, what helps them succeed, and what holds them back. This understanding allows your broker to tailor specific insurance solutions rather than recommending a ‘one-size-fits-all” policy.

Your insurance broker should also be easy to get a hold of when you have questions. A broker of record is responsible for being the go-between for your business and your insurance company, but even a regular broker should make themselves available if you have questions about your policy. No one wants to work with a broker they can’t get a hold of!

How do you identify a top broker out of a sea of possibilities?

First, check their credentials and professional designations. Insurance brokers must hold state-specific licenses and broker bonds in order to sell insurance. Ask to see proof of these if you’re not able to find it yourself.

Next, you want to examine a potential broker’s accessibility — do they have relationships with reliable carriers? Ask your broker who their firm works with to provide coverage. You can also ask to see reviews or testimonials from previous clients. If the firm doesn’t have these displayed, ask to speak directly to current or past clients to hear their experiences. Most satisfied customers are happy to share their experiences. You can also assess a potential broker’s track record for providing stable coverage in a volatile market.

Don’t settle for the first broker you find just to get it over with. Be picky with who you make part of your team because the right partnership with help you grow and scale your business.

Like any service provider, it’s crucial to have a good relationship with your cannabis insurance broker. Canna-business owners have a lot on their plate to manage, and working with an insurance expert can lighten the load. Clear communication and an understanding of your business goals are key to creating this relationship.

Ideally, your business will use the same insurance broker for years, creating a long-term partnership with an expert that helps your business expertly navigate risk, ride out uncertainty, and facilitate stable growth.

When it comes down to it, a high-quality cannabis insurance broker is one that clicks with your business.

It should be someone you enjoy working with and whose opinion you trust. Shop around before you make your decision to compare quotes and scopes of service. Don’t choose the first person you come across, but invest time into finding the right partner. A good partnership between your business and a cannabis insurance broker is worth its weight in gold and can help you navigate problems before they arise and surf the (occasionally) stormy seas of the cannabis industry.

There’s no better safeguard for your business’s long-term success than through proper insurance coverage and risk management. And what cannabis business owner won’t sleep better at night knowing your bottom line (and your investment) is protected?

Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by emailing [email protected] or calling 646-854-1093 for a customized letter of commitment or learning more about your cannabis insurance options.