Cannabis Product Liability Insurance
What is Cannabis Product Liability Insurance?
In the event, your product causes damages or injury due to defects, and you’re found liable cannabis product liability insurance will provide the coverage you need to protect yourself. This coverage will also respond if you received an allegation and not necessarily liable for the defective product. Defects are often an unavoidable eventuality for most large scale operations.
If your product causes unexpected side effects or illness your product liability insurance will cover the damages. You’ll also be covered if a consumer claims to be involved in an accident that occurs while they’re consuming your product. This is an extremely important insurance coverage to invest in and is sometimes required by your city or county to purchase it as a cannabis business owner, such as Los Angeles county.
When it comes to liability the seller, distributor, and manufacturer of a defective product can all be held at fault if a third party becomes ill while using a product. Due to strict liability, all points of the supply chain are at risk. This includes the processor, cultivator, and dispensary.
What is included in Cannabis Product Liability Insurance?
Cannabis product liability can help with the following situations:
- Product recalls
- Bodily harm or illness to a third party due to your product
It’s no secret that product liability coverage is new to the cannabis industry. As a result, many business owners don’t believe they need coverage for cannabis products. While business owners have been able to skirt by without the need for product liability insurance until recently, new regulations and guidelines as well as in an ever-increasing number of cases involving defective cannabis products have made the need for such insurance highly advised.
As the cannabis industry continues to grow lawsuits are expected to increase in frequency. Because the federal government has yet to regulate the cannabis industry, states have taken it upon themselves to create their own guidelines and regulations. Without uniform regulations across the nation (such as safety standards, packaging, etc.) cannabis businesses are easy targets for lawsuits.
What are the benefits of having Cannabis Product Liability Insurance?
Product liability insurance provides a range of benefits for cannabis businesses. These include:
Protection against design defects
Coverage for production flaws or manufacturing
Response for packaging and warning issues
No matter how many tests you run, you may still encounter defects well after your products have reached the production line. Cannabis product liability coverage will provide the coverage needed to protect against design flaws that make your products unsuited for consumer use.
Mistakes can happen during the manufacturing phase that can often fly by unnoticed until it’s far too late. Product liability insurance specializes in providing coverage for production or manufacturing flaws that may cause issues for consumers.
If your company fails to provide proper instructions or warning messages on your product packaging it’s possible your company can be sued. Often claims of this nature come about due to lack of adequate labeling on packaging.
Tips for Choosing Cannabis Product Liability Insurance
Even if you follow every safety regulation in the rulebook mistakes still happens. With that being said, doubling down on your safety regulations and perhaps adding new ones can help to keep your insurance premium down over the long term.
Focus on improving the safety measures of your business by focusing on employee training, finding better ways to produce product, installing security cameras, etc. The more steps to reduce accidents the lower your insurance premiums will be in the long run.
Finding a qualified broker who’s familiar with product liability insurance claims and the cannabis industry is a must. You’ll want to work with someone who knows the industry inside and out; someone who will get you adequate coverage specially tailored for your business and who can guide you along the application process in a streamlined manner.
It might be tempting to get the cheapest policy offered just to save a bit of cash, but you might just regret your decision when it’s time to make a claim, and you’re paying more out of pocket to make up for the gaps that aren’t covered. Focus on the best policy for your business first and the monthly / yearly premium second.
Most product liability insurance policies are specifically tailored to meet the needs of the client. However, you should still ensure you’re being covered adequately to ensure you’re fully protected if you’re forced to file a claim. There may be exclusions in your policy that will not be covered that you may not be aware of. Read your policy thoroughly to avoid any unexpected surprises.
Get a Cannabis Product Liability Insurance Quote
Protect yourself and your business by reaching out to Cannabis Connect Insurance, so we can help you find the right policy for your business.