Canadian insurers only have bunk deals for anybody who grows pot at home.
For the many Canadians who are medically licensed through the federal government, it’s already legal to produce marijuana at home. All the other adults in the country will be able to legally grow it at home next July.
Medical producers are able to obey all the laws and recreational users will soon be able to as well. The practice of domestic marijuana production is proliferating in Canada, but the those exercising the newfound freedom have no option to cover their homes through any domestic insurance agency.
In May, the Peachland View wrote about the Busato family, who lost their home to a fire and had their insurance claim denied because of a Health Canada-sanctioned grow-op that had nothing to do with the cause of the blaze.
Their insurance company being counted on by the Busato’s, Gore Mutual, told the View earlier this year that it had no immediate plans to offer the coverage for domestic marijuana production.
Another Okanagan resident, whose identity the View is keeping private, has medical marijuana legally growing at home, and until reading about the Busatos, she was also under the impression her home would be covered in the event of an accident, so long as the marijuana wasn’t the cause of the claim.
Upon realizing how vulnerable her family was, the pot-producing homeowner became very apprehensive and sought out coverage for a legal grow-op.
The local woman has no history of making claims and she isn’t presenting any other extraordinary liabilities. She explained her situation to Kelowna broker Eric Lock with AC&D Insurance, and he was unable to find a Canadian insurance company that would offer any sort of coverage for domestic pot production.
Since shopping local isn’t an option, Lock used a Canadian facilitating company to connect with an insurance broker in England. The company operates through Lloyd’s of London, which has a reputation for offering versatile coverage.
Through the facilitating company, Lloyd’s offered to underwrite the local client for roughly double their previous rate. “The insurance industry is lagging behind what’s happening in the market,” Lock said.
“I know people of all walks of life who use medical marijuana. It’s unfortunate that people are putting their futures at risk just to medicate themselves.” The Canadian government could attempt to pass legislation requiring insurers to provide such a service, “But forcing businesses to do things they may not want to do, I don’t know if that’s a recipe for success,” he said.
There are a number of reasons why insurance companies might be slow to adapt. Policy rates are based on past claims, and with such little data available for the risks of a legal grow-op, “We can forgive companies that want to take a wait-and-see approach.”
There’s also a stigma attached to medical marijuana because some people consider it to be an illicit street drug.
However, Lock is optimistic for the insurance companies that decide to experiment with marijuana. “My personal opinion is that people who run these legitimate grow-ops, they’re more cautious (than renegade pot producers) because they’ve got skin in the game,” he said. “This is their medical marijuana, there’s a consequence beyond finances – they’ll be out of medicine.
And people with medical licenses generally don’t broadcast it or want to stand out in any way.”
If people growing medical pot at home act diligently and minimize claims, the insurance companies treading in uncharted bong waters are likely to see some dank returns on their investment. But for medical pot growers who can’t afford to double their cost of home insurance, the stakes are high.
“I’m sure people are voiding their policies” Anybody in that predicament can reach out to Lock via email email@example.com.
Confidentiality is assured. “Options are available – it’s much better not to wait for something bad to happen.”