$200,000 Medical Marijuana Insurance Claim Declined

Medical Marijuana Dispensary insurance claims could be declined due to not having the correct safe, per specified insurance underwriting guidelines. Why would anyone operate a business without the proper equipment?

Prior to buying any safe or security system for any business, owners should ask: "What are the safe requirements for my business insurance?" This question, which should be asked of a qualified insurance agent, is critical, as each insurance carrier has their own safe requirements that must be met or there is no coverage for the claim filed. Insurance carriers, in response, should ask what weight the safe should be. Most of insurance programs require a minimum weight of 1,000 lbs. Some carriers will allow less but additional underwriting requirements are much tougher to meet such as the safe must be bolted to the ground and it must be UL (United Laboratories) rated. So, there really is no "cookie cutter" method to underwriting unless your agent only has one carrier to furnish quotes. Until you know which insurance carrier is going to insure you, wait to purchase a safe. One mistake new clients make is to buy their safe, security and video systems prior to talking with their commercial insurance agent. If new business owners would wait and talk with the Statewide Medical Marijuana Specialty unit first, they might find that purchasing and installing the right equipment could save them money and make them eligible for enhanced coverages or higher limits, with little-to-no additional premium.

Here's an example:
If you need to insure from $200,000 to $1,000,000 in product, the carrier may require a safe that is 2,000+ lbs. with a minimum UL fire and burglary rating of one hour. But, if you only needed to insure $25,000 in medical cannabis products or less, a carrier may only require an 800+ lb. safe that is bolted to the ground, without the UL rating. The price difference between these two options could be several thousand dollars.

Before anyone buys a safe, do some research. Don't just buy what you see at your local members club or online discount store. Call and talk with a security specialist first. Google "commercial safe companies" and see what is available, which companies service your area. Ask vendors if they've provided security for cannabis operations in the past. Remember, it's free to ask questions.

Statewide Insurance Services, MMD Specialty Unit just insured a company needing a builder's risk insurance policy for a new building they were constructing for their cannabis dispensary and cultivation operation. In our review of their needs, we discussed the types of safes which would be the best suit their business structure. We found that an in-floor safe was perfect option for this insured. From a cost perspective, this was a perfect time. The insured was about to start construction of their facility and were able to make modifications to the foundation plans prior to pouring the concrete. Adding an in-floor safe would cost them no more then a "middle-of-the-road" safe and the insured received maximum discounts for upgraded security. They operation was able to insure $500,000 of harvested medical marijuana. A comparable safe, above ground, would have only been insurable up to $50,000 in medical marijuana theft coverage.

No one's life is worth what's in the safe. If cannabis dispensaries, collectives and cooperatives can find ways to thwart, slow or inhibit thieves from robbing their business, two things happen: the business is safer for employees and patients; and the chance of being robbed at gunpoint or burglarized after hours has been diminished. Better security means that the insurance carrier can provide higher discounts and more comprehensive coverage to meet the needs and budget of the business.

  • Installing the right equipment makes you eligible for the coverages you want.
  • Installing the right safe protects your business, your employees and your patients.
  • Installing the right safe lowers insurance costs.
  • Calling an insurance agent in advance of buying security equipment improves the return on investment.