Big day tomorrow as Canada formally legalizes Cannabis!
While you're out celebrating the big change, or hiding from second hand smoke...I'm over here considering the impact on insurance coverage.
*Insurance Nerd Status CONFIRMED if it was ever in question.
Let's bring everyone up to speed on the how this is going to work.
On Wednesday Oct 17th 2018
Canadians over the age of 19 will be allowed to:
*You can possess up to 30 grams, and grow up to 4 plants per household.
Local Municipalities like the City of Halifax, or the Town of (insert any town) get the honor of creating and enforcing bylaws to dictate WHERE you can use it or grow it.
*Shout out to Halifax on their VERY popular choices so far on the new bylaws.
Indoor grow ops and smoke filled bus stops are the future.
Now that people can legally possess this stuff, insurance companies need to revisit how they plan to handle claims related to it.
Here's 4 insurance changes to consider about Cannabis
1. Weed just became INSURED CONTENT.
Prior to legalization Mary Jane was always excluded from Property Insurance coverage.
The specific exclusion is often worded something like:
“ILLEGALLY ACQUIRED, KEPT, OR STORED CONTENT”.
Since tomorrow is the big day and it's NOT illegal anymore, insurer's have to switch things up.
Most property policies will see Cannabis moved to the SPECIAL LIMITS section to put a maximum payout on Cannabis at say $500 or $1000.
There is at least ONE insurer who is not limiting Cannabis at all for MEDICINAL users.
Everyone's situation is different, but if you're sitting on a year's supply of the stuff you may want to make sure you're not limited to $250 in coverage.
Another reason why an independent broker is your best option for insurance.
2. Most insurers will be EXCLUDING CANNABIS from Trees, Shrubs, and Plants related coverage.
This isn't exactly a change, but it's worth noting that if you are spending some time and effort growing outdoor plants, it's unlikely that any insurer is extending coverage to those plants.
Worried about Bambi and his crew with the munchies eating your plants?
Maybe put up a fence.
3. Impaired Driving w/Cannabis will be A LOT like Drinking and Driving.
Insurers are rolling these convictions into the same pile as drinking and driving.
If you think Auto Insurance is expensive NOW you won't want to see how one of these on your record jacks up your rate.
In addition to the fine and probable license suspension...whoever is unlucky enough to get the first of these tickets is probably going to make the news.
The money being spent on "don't drive high" ad campaigns is serious, and I think we can all expect a real focus on it from Police.
4. Building/Content damages CAUSED by GROWING.
This one is interesting.
A COMMON EXCLUSION in most homeowner policies talks about damages caused from using the home to grow marijuana. It often looks something like this:
The old exclusion talks about marijuana directly, and also points to the CONTROLLED DRUGS and SUBSTANCES ACT which USED to have Cannabis listed.
But as of tomorrow, Cannabis will be OUT of the CONTROLLED DRUGS and SUBSTANCES ACT and getting into it's own CANNABIS ACT.
Most insurers have made changes to the language in policy to better explain what they're trying to exclude.
Here's an example of a new one:
On all policies, excluding watercraft, loss or damage to buildings or structures or personal property contained in them is excluded when used in whole or in part for the cultivation, harvesting, processing, manufacture, distribution, or sale of cannabis or any product derived from or containing cannabis, except as allowed by law.
Changes like these lead me to believe that the trend will be for insurer's to be OKAY with the risk that people are growing 4 plants inside their home.
That being said, this is only one company. There are all kinds of property insurers out there including a number of direct markets who don't always follow industry standard.
It's very possible some companies will not have any changes ready for tomorrow or they may have no interest in covering loses due to growing plants indoors.
So if you're planning to grow a few plants indoors, you may want to check with your broker to make sure any damages caused by it would in fact have coverage.
Based on how I'm reading some of these these wordings, opting to grow a few more than what's ALLOWED BY LAW could be enough to deny a claim in some situations.
I have NO DOUBT this will be a contentious issue for years to come for insurers and clients who push the envelope on growing one too many plants.
There is a real risk in growing plants indoors if you don't take the proper precautions. A lot of heat comes off these high-powered lights. There are often extension cords and exhaust fans, with containers of water sometimes in tight spaces.
Whether you use it medicinally, or just for recreation make sure you're covering your bases and being responsible. If you're going to take a crack at it, do your homework and treat the process with some respect.
2018 is quite a time to be alive.
IF YOU'RE IN ANY OF THE BELOW SITUATIONS, TAKE STEPS TO MAKE SURE YOU'RE PROPERLY COVERED.
1. They're off to school & TAKING A CAR with them.
DOWNSIDE TO NOT MENTIONING IT - POTENTIAL DISASTER.
This info can be CRITICAL for coverage to remain intact. If you fail to mention it you're treading in 'MATERIAL CHANGE IN RISK' territory.
Your auto policy references a few "mandatory conditions" and this is one of them.
TRANSLATION - you need to promptly notify your company if your insurance situation changes, or the coverage may not be there when you need it.
If one of your vehicles is being regularly driven and stored somewhere new, update your broker.
2. They're off to school & NOT taking a car with them.
DOWNSIDE TO NOT MENTIONING IT - OVERPAYING FOR NO REASON.
You may qualify for a significant discount when you have a CHILD AWAY AT SCHOOL.
Bonus: The child continues their positive insurance history while they're away!
If your insurer DOESN'T have this it's still likely the vehicle usages are changing, leading to some premium savings.
3. They're staying ON campus
Your PROPERTY policy likely has an extension for students away at school.
TRANSLATION - your content coverage follows them to their new place.
Make sure you Check with your broker to see if there is a limit though.
i-phones, laptops and Playstations can add up fast!
4. They're staying OFF campus
Consider getting them a tenant policy.
At around $200 for the year, it's affordable.
THE WIN HERE IS THE LIABILITY COVERAGE....not coverage for their BLU-RAY collection.
If junior 'falls asleep' at 2am while filling the bathtub, that insurance policy is going to seem really smart.
SIMPLIFY YOUR INSURANCE by having a relationship with your broker and keeping them in the loop.
A simple text or email saying:
"Jenny is going back to school at Mt. A and is taking the Corrolla" could save you from a denied claim.
Add UPDATE MY INSURANCE to your back-to-school shopping.
Everyone loves 'fast and easy' when buying things.
The downside is that it doesn't always translate to
GET YOURSELF A ‘GO-TO' PERSON.
Ideally it's the same person each time because explaining myself multiple times to new people is a special kind of awful for me.
I find real value in ‘knowing someone to call'
when I have a problem...and with all else being equal I'll take service and relationship every time.
"Why yes. I'd love to hold. thanks."
A good broker should be able to work with you throughout a claim.
- Help with documentation and getting things started right.
- Retrieve answers when things aren’t moving quickly.
- Set expectations and explain things as they are happening.
- Keep an eye out for what's best for YOU on renewal and going forward.
'Lawyering up' right away on a denied claim and dealing with it all yourself can take years off your life mentally not to mention draining you financially.
Having an informed broker is like having Tom Brady available on the bench when you need him. He knows the game, calls the right plays and suddenly you've got people you've never heard of looking really good. (Danny Amendola is a restoration vendor in this metaphor.)
Last but not least.
SUPPORT SMALL BUSINESS.
Supporting small businesses feels good and creates local jobs.
Multinational Conglomerates are great... but if you can support someone in the community that'd be my preference.
Take some time to figure out if you’re supporting a local business owner. There are some great ones out there so when your policy renews find one who's interested in you and worthy of your business.
Matt Davison is a
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Back To School
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