By Dan Walton
Canadian insurers only have bunk deals for anybody who grows pot at home.
Growing medical marijuana at home is already within the confines of the Canadian law, and soon it will be legal to grow it for recreational use as well. And while the practice of domestic marijuana production is proliferating in Canada, those exercising the newfound freedom have no option to cover their homes through any domestic insurance agency.
Insurance companies are lagging behind what’s happening in the market, according to Eric Lock, broker with AC&D Insurance in Kelowna.
One resident of Oliver, whose identity the Chronicle is keeping private, has been legally growing medical marijuana at home for months. In the event of a claim, she was originally under the impression that her insurance policy would be valid so long as the marijuana didn’t cause the accident.
Even if a strike of lightning caused the family home to go up in flames, the insurance company would not pay the claim if it was discovered that marijuana was being grown on site, even if it’s been legally sanctioned. And she has a mortgage on her house which stipulates that she insures the property – so in order to legally grow medicine for her family, she was paying for a void insurance policy for years.
Earlier this year when the local woman discovered how vulnerable her family was, she began shopping around for an insurance policy that covers marijuana production.
The local woman explained her situation to Kelowna broker Eric Lock with AC&D Insurance, and he was unable to find a Canadian insurance company that would offer any sort of coverage for domestic pot production.
Since shopping local isn’t an option, Lock connected with an insurance broker in England called Lloyd’s of London, which has a reputation for offering versatile coverage. Lloyd’s offered to underwrite the local woman for roughly double her previous rate – she has no history of making claims and she isn’t presenting any other extraordinary liabilities.
“The insurance industry is lagging behind what’s happening in the market,” Lock said. “I know people of all walks of life who use medical marijuana. It’s unfortunate that people are putting their futures at risk just to medicate themselves.”
The Canadian government could attempt to pass legislation requiring insurers to provide such a service, “But forcing businesses to do things they may not want to do, I don’t know if that’s a recipe for success,” he said.
There are a number of reasons why insurance companies might be slow to adapt. Policy rates are based on past claims, and with such little data available for the risks of a legal grow-op, “We can forgive companies that want to take a wait-and-see approach.”
There’s also a stigma attached to medical marijuana because some people consider it to be an illicit street drug.
However, Lock is optimistic for the insurance companies that decide to experiment with marijuana. “My personal opinion is that people who run these legitimate grow-ops, they’re more cautious (than renegade pot producers) because they’ve got skin in the game,” he said. “This is their medical marijuana, there’s a consequence beyond finances – they’ll be out of medicine.
And people with medical licenses generally don’t broadcast it or want to stand out in any way.”
If people growing medical pot at home act diligently and minimize claims, the insurance companies treading in uncharted waters are likely to see some dank returns on their investment. But for medical pot growers who can’t afford to double their cost of home insurance, the stakes are high.
“I’m sure people are voiding their policies” Anybody in that predicament can reach out to Lock via email firstname.lastname@example.org.
Confidentiality is assured. “Options are available – it’s much better not to wait for something bad to happen,” Lock said.