Operations for a wide swath cannabis companies necessarily include shipping product or products from one point of the supply chain to the next. From the farm to the consumer, cannabis products find themselves in transit regularly. As a result, it is not rare to know someone who has had a problem with theft in transit. Many cannabis companies rely on the expertise of third-party transit carriers for these shipments. Many of those transit carriers in turn carry their own insurance for damage to or theft of goods in transit. With profits and costs on the line for a universe of products new to the shipping industry itself, though, can cannabis companies protect themselves while those products are in transit?
Transit carriers most often do carry their own insurance coverage for standard occurrences causing damage to shipped goods. But the terms of that insurance are not always necessarily known to anyone other than the transit carrier itself. Traditional transit carrier insurance policies may not have robust coverage for theft, or they may not be well suited to cover risks specific to cannabis products in transit. For that reason, when compiling a comprehensive coverage program, cannabis companies should consider securing their own cargo-in-transit coverage that is best suited to their particular products and needs.
One of the obvious benefits of securing this coverage independently is that any particular cannabis company knows the applicable limits of liability available for coverage, and the terms and conditions under which coverage may apply. Knowing how much insurance coverage is available for any instance of theft (or damage), and when that coverage may not be available, should allow cannabis companies to cabin risk without having to rely on not only one third party (a shipper), but another one (the shipper’s insurer). On the other hand, independent cargo-in-transit coverage specifically negotiated to suit a company’s needs allows for better business planning and a better understanding of the dollar delta risk at issue.
Many insurance carries underwrite cargo-in-transit coverage that can apply whether a cannabis company is shipping its own product, or even shipping through a traditional transit carrier. Cannabis companies can negotiate the terms of that insurance at the underwriting stage and develop more robust protections tailored to the products that they ship. Evaluating the coverage options available in any particular insurance program (or a future one) can allow a policyholder to control its own destiny, at least with respect to any given risk. In the end, that’s not just good business–it’s peace of mind.
Harris Bricken’s cannabis insurance coverage lawyers have experience advising policyholders in many industries about the coverage available in their coverage programs and where policyholders might consider more coverage. If you have questions about your insurance coverage program, we can provide coverage analyses of what risks may or may not be insured under current existing (or future contemplated) programs.
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