Cannabis companies face unique risks; however, they also must navigate some of the most fundamental risks of merely doing business. You’ve likely heard of the notorious “slip-and-fall” claims that quickly snowball from a minor incident to a costly lawsuit. General liability insurance responds to many of these situations cannabis companies find themselves traversing. So, let’s talk about this vital coverage and why we consider it the basic foundation of every risk management plan.
What Risks Do Cannabis Companies Face?
Nearly 40% of small business executives will experience a general liability claim within the next decade. These stats mean cannabis companies must develop a robust risk management plan to combat such blatant risks.
For example, many cannabis companies host regular visitors (i.e., customers, vendors, delivery personnel, etc.). If one of these individuals sustained bodily injuries on your premises, your company would likely be responsible for their medical expenses. This scenario is the epitome of the famous “flip-and-fall” claims — and they’re no joke.
Or consider publishing a blog post on your website, but you accidentally defame or plagiarize from a competitor. Some folks might be forgiving, and some might choose to sue your cannabis company, leaving you legally liable for their personal or advertising injury.
On that same note, many cannabis companies rent space from a landlord. In doing so, however, you risk legal liability if the rented space sustains damages.
We mentioned earlier that general liability insurance is the foundation of a solid risk management plan. So, while these scenarios might sound like minor incidents that some people can merely sweep under the rug, they can also escalate and burn a hole in your professional pocket at lightning speed.
What Is General Liability Insurance?
General liability is often known as “all-risk” insurance as it protects cannabis companies against some of the most fundamental risks businesses face. This policy covers personal or property damage and bodily injury occurring on the business premises.
Remember that regardless of your company’s size, plenty of risks knock at your door daily. As mentioned, traditional “slip-and-fall” claims are only the tip of the iceberg regarding the extensive vulnerabilities you might encounter.
This policy covers a wide range of risks by paying for the costs of litigation and restitution for the injury. These costs can include court-awarded damages, settlements, and medical expenses. In short, general liability insurance creates a soft landing place for many allegations.
Who Needs It?
The short answer is that everyone needs it.
As mentioned, general liability insurance provides broad coverage for the most fundamental risks companies face. Unsurprisingly, legal liability can arise from the simplest of activities. For example, if your cannabis company operates a brick-and-mortar facility, you will have general liability exposure.
Aside from owning or renting property, legal liability can impact cannabis companies at any level. That said, general liability coverage is critical at every step in the supply chain, including:
- Manufacturing and extraction
- Lab testing
- Financial services
- Investment funds
What Does Cannabis General Liability Insurance Cover?
General liability insurance is often referred to as “all-risk” insurance because it provides broad coverage. Nevertheless, here are a few incidents that general liability covers:
- “Slip-and-fall” claims: Suppose a vendor or customer visits your office and hits their head after tripping on a power cord.
- Property damage: While visiting a customer’s facility, one of your team members stumbles and spills their coffee on some high-end computers and monitors.
- Product liability: Even though your product is packaged by another company (you merely source the cannabis), you might be on the hook for defects in the overall outcome when customers report issues. Products Liability can be included on a general liability policy. Products completed operations (PCO) coverage can protect you from legal liability resulting from use of your product.
- Damage to rented space: After forgetting to unplug a space heater in your rented office space, it causes an office fire that destroys most of the office, and your landlord sues for the damages.
- Personal injury: While speaking to a potential client, you make a regrettable comment about a competitor. The competitor finds out and considers your comments to be slanderous.
- Advertising injury: In an email blast to your entire mailing list, you use a catching tagline, and it works! However, you inadvertently plagiarized another company’s content, and they came calling.
What It Does NOT Cover
As with most things in life, even a general liability policy has limitations. The following is a list of situations that this policy doesn’t cover, including:
- Damage to your property
- Employee injuries
- Professional liability
- Intentional copyright infringement
- Willful negligence
- Intentional injury or property damage
How Much Does General Liability Insurance Cost?
Each cannabis company has its unique exposures, and liability limits vary depending on a company’s needs. A trusted commercial insurance broker can address various vulnerabilities and help customize insurance products. Still, here are a handful of factors that will impact the cost of general liability insurance:
- Claims history
- Policy limits
- Company practices
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 to learn more about your cannabis insurance options.