While some insurers remain skittish over potential exposures created by the discrepancy between state and federal laws governing the sale and use of medical and recreational marijuana, others embrace covering the fledgling industry and the professionals who serve it.
Mike Aberle, vice president of marketing and sales and head of underwriting at Rancho Cordova, Calif.-based MMD Insurance Services, a unit of GP Insurance Brokers, developed a program specifically for the medical marijuana industry more than five years ago.
Since its inception, loss ratios have remained under 25%, he said.
“We saw some fire claims at the beginning because (growers) had higher-wattage bulbs than the facilities could accommodate,” Mr. Aberle said. However, “we have not seen any professional liability claims.”
The managing general agent provides up to $2 million in occurrence-based limits for general liability, product liability and completed operations, he said.
For an additional premium, MMD Insurance will arrange another $1 million each in employment practices liability, professional liability and cyber liability coverage. Insurance also covers hospitality events where marijuana is served.
Under a governmental action reimbursement endorsement, the policy will pay legal defense costs stemming from an arrest or charges filed as a result of “the possession, transporting, cultivating or sale of medical marijuana or any derivative of medical marijuana for which the named insured enters a plea of not guilty and for which the named insured believes they have a legal right to do so under state law.”
“If they are arrested and formally charged by a state agency or lesser, we will cover the defense costs if the insured pleads not guilty and is found not guilty,” Mr. Aberle said. However, “if the insured is found guilty, then we will deny the claim because we cannot insure an illegal action.”
Moreover, “any federal charges cannot be covered because it is illegal to insure an illegal action,” Mr. Aberle said.