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Cannabis Insurance and Coverage Disputes

Legal representation in disputes with insurers has become paramount for cannabis companies in an ever-expanding operational environment. Cannabis companies may seek to insure against risk of loss as a result of challenges such as unexpected fires, crop protection, business interruption, or adverse consumer reactions to products. In many instances, cannabis companies are even required to insure against such losses in connection with obtaining and maintaining a marijuana license.

Since 2010, we have helped cannabis businesses navigate rapidly evolving cannabis regulation and policy, and our cannabis insurance coverage attorneys advise clients on what coverage, if any, may be available for a particular loss. Insurance policies are often drafted with myriad conditions that govern (and provide exclusions to) coverage. If you have suffered a loss, coverage attorneys can review your insurance program and advise which coverages may apply, as well as which coverages may not. Coverage attorneys can also help you navigate the procedural tricks that some insurers play – for example, denying a claim by citing the illegality of cannabis possession under federal law  – when seeking to avoid their obligations under applicable policies. If you have suffered a loss and you are not sure whether your insurance program should cover it, a good cannabis insurance coverage attorney can help you identify the best strategy for you to collect under your policies.

Insurance overage lawyers also represent cannabis companies in tendering claims to their insurers, as well as disputes with their insurers, often through formal litigation and even trial. Insurers have a “playbook” for handling claims—in any industry—and counsel with extensive knowledge of that playbook can help you move your insurer towards paying your claim. This can include filing a declaratory judgment action requesting that a judge declare that your insurer has wrongfully denied a claim. Identifying the right coverage strategy can help you avoid the costs of litigation and settle a dispute before filing a complaint, or taking a case to trial if your insurer persists with its denial.

In some jurisdictions (e.g. in Washington state, via the Insurance Fair Conduct Act), legislation provides cannabis companies in insurance disputes with other statutory remedies, even including payment of attorneys’ fees and the costs of litigation if you succeed in your claims against your insurer. The Act delineates several unfair practices specific to the insurance business. Under the Act, insurers have a duty to promptly investigate your claim, fairly settle the claim if coverage is available, and otherwise act in good faith. You must take several procedural steps to protect your rights under this statute, and our insurance coverage team has the knowledge and experience to maximize your recovery.

Over the years, our cannabis insurance coverage team has gained extensive experience representing both insurers and policyholders. We have advocated on behalf of both sides and know cannabis insurance playbooks inside and out. Projects have included:

Underwriting advice
Insurance disputes and coverage claims
Mediation and arbitration

These and other coverage issues play out every day in the cannabis space. Most recently, we had the opportunity to advise on coverage programs in place as a hedge for investment in new facilities. This entailed reviewing policies to ensure total coverage was available for losses that might otherwise fall outside of the investor’s hands, as well as ensuring that the potential investor was a named insured under the policies.

If you have questions about your coverage program, or would like to expand upon it, contact Harris Bricken’s coverage attorneys today. In the meantime, for more on cannabis insurance and insurance litigation, check out the following:

Anatomy of a Cannabis Insurance Policy, Part 1: The Basics
Anatomy of a Cannabis Insurance Policy: Exclusions
Cannabis Business Basics: Liability Insurance is a Non-Negotiable Priority
Cannabis and Insurance Litigation
Yes, Washington, You Really Need Cannabis Business Insurance
Hemp Insurance Litigation: Oregon Federal Court Rules Insurer Has No Duty to Indemnify Hemp Farmer for Plant Loss

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