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5 Things You Need to Know About Insuring Your Business

5 Things You Need to Know About Insuring Your Business

Just about the last thing on anyone’s mind when starting a new business is insurance. When you do think about it, the words “expensive” and “complicated” probably come to mind. Who needs that hassle?

In short: you do. Protecting yourself and your investors should be at the top of your list! Here is some handy, yet simple information that will help you understand what insurance is and why you need it.

Premises Liability

Any time anyone steps out of their vehicle in your parking lot or walks through the doors of your establishment, you run the risk of being sued. Slips and falls can occur on the most well-kept of premises. Injured patrons of your establishment might consult a lawyer to determine how much they can get for their medical bills, pain and suffering.

Personal injury claims are expensive: from the legal fees (their and yours) to the awards (if any). A premises liability policy offers compensation for legal expenses and awards that might otherwise come out of your own pocket.

If you are leasing the premises, your landlord will most likely require that you have this coverage before you can even move in. He might even require that your policy name him as additional insured. This will provide coverage to the landlord in the event someone is injured on the property that you occupy and are required to maintain.

Another good reason to purchase this coverage is that your landlord’s insurance policy, if he has one, isn’t going to cover you.

Contents/Property Coverage

Property insurance is something you are probably considering, if only for the coverage it provides against fire and theft. What should be covered under a property insurance policy? It’s more than you think.

Stock for your business is likely your largest asset, and should be covered under property insurance. This would include not only the cannabis product and edibles, but also any paraphernalia associated with these products.  Other items to insure would include your furnishings, office equipment, computers, and other items used by your business.  You should also include any wall art or decoration to that total.

Often overlooked in property insurance coverage is the build-out of your premises. Any special counters, cabinets, or other special construction done by you to customize the space you occupy can and should be insured under a property insurance policy.

Premises liability, as previously discussed, does not insure your contents. A separate property insurance policy is needed, or the two lines of coverage can be packaged into one policy.

Your Employees

Workers Compensation Insurance can be an inexpensive way to help your employees and volunteers with on-the-job injuries and is a must for any business.  You are required by law to provide Work Comp for all employees, whether they are full-time or part-time.  Even if you only have one employee, most states require that you purchase this coverage.

Who is considered an employee? The definition is broader than you might think! Employee classification isn’t determined just by whether or not you are paying someone to work for you. Family members and even volunteers could be considered as employees. Independent contractors like your hash oil extractor may also be considered employees.

Your Delivery Operations

If your business has delivery operations, you will need a commercial auto insurance policy. This is true whether your business owns vehicles that are used specifically for delivery, or if your employees use their personal vehicles for company business.

Things to consider:

  • Your employee’s personal vehicle will not offer insurance coverage in the event of an accident while the vehicle is being used for company business.
  • If you are using your own personal vehicle for company business, including transporting wholesale product (not just for delivery), your personal insurance will not cover you in the event of an accident.

A commercial auto insurance policy will protect your business and your employees in ways that personal auto insurance will not. Hired and non-owned auto liability can sometimes be added to a premises liability policy for a nominal fee for incidental use. However, If you business offers delivery, more comprehensive commercial auto coverage will be required.

Risk Management

Risk is what you do. Risk management is what you do about your risk.

There are many other aspects of insurance for cannabis operations that can be tailored to fit your specific business. These policies are designed to keep your out-of-pocket costs low in the event of a claim. Coverage may include: Directors & Officers Professional Liability (D&O), Employment Practices Liability Insurance (EPLI), Cyber Liability and more.

An insurance broker experienced in the cannabis industry should be your first stop when trying to determine what insurance coverage is needed. Talk to your broker about ALL of your operations, safety features, business concerns and even your future plans. The right broker will help design an insurance portfolio that protects you and your business.

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