Environmental Insurance for Cannabis Businesses
Cannabis companies may be considered a relatively new business segment, but the environmental impact of agri-businesses have been on the radar for a long time. From activities involving disposal and maintenance, to less predictable incidents like a leaky storage tank or flooding from a natural disaster, the potential risk of running this type of business can be significant. It is crucial for business owners and managers to protect their investments with insurance coverage to address these exposures.
Possible pollution exposures for cannabis operations include:
- Odor control: odors from farms and dispensaries may impact neighboring businesses or populations.
- Pesticide/herbicide overspray: chemicals applied to plants could inadvertently affect a third party’s health.
- Soil management and disposal.
- Environmental cleanup costs due to mold and moisture intrusion at indoor growing centers.
- Misapplication of biosolids and manure leading to potential stormwater runoff issues.
- Over the road spills of chemicals and fertilizers: damaging nearby property, streams, and potentially wildlife.
- Storage of chemicals, fertilizers, and equipment: causing an on-site pollution condition that must be cleaned up.
- Leaking storage tanks, causing extensive damage on-site and to neighboring properties.
- Wastewater management: unintentional discharge of untreated wastewater causing first and third party property damage, and even bodily injury in some cases.
- Deforestation
Why does a cannabis business need specialized coverage?
Most standard General Liability policies have broad pollution exclusions on their property policies. Those that don’t will typically provide only a very low sublimit to address a pollution-related claim, or their coverage terms are so narrowly defined that they will not respond to the vast majority of common loss scenarios. If they do respond, typical limits will often not be adequate to cover the costs to investigate a loss, let alone actually address the cleanup.
Site Pollution Liability Coverage
The environmental insurance policy that is most applicable to addressing cannabis business pollution concerns is a Site Pollution Liability policy, also known as a Premises Pollution policy. This product is designed to provide coverage for unknown, historical environmental liabilities as well as unexpected future environmental liabilities. Additional details include:
- Coverage is provided for locations scheduled on the policy.
- Coverage can include Third Party Liability for On and off site Bodily Injury, Property Damage and Cleanup, as well as First Party Onsite Cleanup for the Insured premises to remove contaminants.
- Coverage for aboveground storage tanks is built into the policy form; underground storage tanks may be added via endorsement.
- Blanket Transportation Pollution liability is provided via endorsement, and Contractors Pollution Liability may be offered if the business has a contracting exposure (for example, pesticide or biosolid application for others).
- Natural resources damage is defined and covered in the policy.
Target customers who should consider purchasing Site Pollution Liability coverage include: cannabis farm owners and operators, indoor growing facilities, and dispensaries. Premiums generally start around $3,000 for $1,000,000 policy limits.
For more information or to discuss an account, please contact us.
Type: Blog
Topic: Agriculture, Cannabis, Farm
