Are you properly insured as a cannabis landlord in Canada?
A 2018 court ruling in Saskatchewan has landlords across Canada buzzing. Tenants who were attempting to produce cannabis resin caused an explosion and fire damage to the property they were renting. The landlords made a property insurance claim. When their claim was refused by the insurance company, the landlords took the insurer to court. Citing an exclusion on the front page of the landlord’s two-page renewal form, the judge ruled in favour of the insurance company.1
Here’s the exclusion: “We do not insure: 15. Dwellings, outbuildings or personal property contained in them, used in whole or in part for the cultivation, processing, manufacture, distribution or sale of marijuana or any product derived or containing marijuana or any other substance falling under the Controlled Drugs and Substance Act Narcotic Control Regulations.”2
Globe & Mail: Landlords beware: Insurance won’t cover damages caused by tenant drug operations
While the landlords in this situation weren’t aware of the cannabis production in their rental property, the risks of being a cannabis landlord – knowingly or unknowingly – are clear.
If you are a cannabis landlord, you need to know that your insurance requirements are unique in the marketplace. In fact, the process to secure insurance for cannabis landlords is different from standard insurance placement. Because insurers view cannabis landlord insurance as high risk only a limited number of insurance companies are comfortable underwriting your risks. ALIGNED Insurance brokers understand cannabis risks and can help ensure you get properly insured as a cannabis landlord in Canada.
High risks that cannabis landlords may face
There’s a relatively small insurance marketplace in Canada that welcomes cannabis risks. Only some insurance companies underwrite cannabis-related risks, including those faced by cannabis landlords. Here are some of the high risks that concern insurers:
- Potential for water damage due to the growing systems
- Concerns over mould and fungus risk
- Spoilage risk of the cannabis inventory
- Higher probability of fire
- High market/dollar value of the product and inventory
- High business interruption exposure given the value of the product and growing time needed
- High value and specialized nature of equipment, lights, ventilation systems etc.
- Significant machinery breakdown exposure due equipment needed for growing and sensitivity of the products to temperature and humidity
Get coverage that responds to the risks you face as a cannabis landlord
Across Canada, ALIGNED insurance brokers have cultivated a deep and thorough understanding of exactly what’s needed to cover cannabis industry-related risks. Not only do we understand how to navigate the current coverage options available, we know where to find the best available insurance options for cannabis landlords in the Canadian marketplace.
And if your tenants grow cannabis on the property they are renting from you, additional information about their growing operations that you’ll need to provide includes:
- A complete business interruption worksheet
- A complete statement of values
- COPE Information on the location
- A complete marijuana growers insurance application
- Passed electrical inspection, conducted by a licensed contractor
- A copy of your tenants’ cannabis growing license
Good to know. We’re here to grow with you.
Knowing that you are properly insured as a cannabis landlord is vitally important. ALIGNED insurance brokers have strong relationships with more than 65 of Canada’s top insurance companies and are able to provide choice and options to each and every one of our clients. We understand specific cannabis risks and exposures. We’re proud to help Canadian cannabis landlords get ALIGNED with the best available coverage options.
Sources: 1,2 Globe & Mail:Landlords beware: Insurance won’t cover damages caused by tenant drug operations; 3 ALIGNED Insurance: Insurance for landlords with cannabis growing tenants