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Does My Mobile Cannabis Business Need Insurance?

Does My Mobile Cannabis Business Need Insurance?

It is a fallacy that many mobile cannabis businesses fall into: if I don’t have a retail location, I don’t need insurance.  The truth is, if you have a business of any type, you need insurance to protect yourself and your investors. No Retail Location? You Still Need Insurance. Many only equate the need for insurance with business locations and landlords. However, if you run your business out of your home you still need insurance coverage.  Why? Because both typical and atypical business pursuits are excluded by your homeowners or renters insurance. Personal lines policies exclude any business done in the home or anywhere on the home premises. The policies exclude the work being done, the work product, employees, inventory and business equipment. Some policies may even cancel coverage for homeowners operating businesses out of their homes. If you are storing stock in your garage or in your spare bedroom, there is no coverage for it in the event of a fire, theft or other hazards. Liability coverage under your homeowners policy also will not extend to business pursuits. There will be no coverage for customers on premises, products liability, or personal or advertising injury, as businesses are excluded from the policy. The good news is both of these coverage lines can be written on your business even if you are operating out of your home. No Commercial Auto? You Still Need Insurance We have previously blogged about the need for commercial insurance for delivery services. The exclusions for livery use of personal vehicles applies whether the car is owned by you, your spouse, or an employee.  The only...
Case Study: Cuisinart Products Liability

Case Study: Cuisinart Products Liability

In December 2016 Cuisinart was the talk of the town, and not in a good way. Consumers of Cuisinart food processors began reporting mouth injuries and tooth damage related to pieces of processor blades that ended up in their food. Cuisinart announced a massive recall of the riveted blade products sold in the US and Canada. The recall encompassed products sold from July 1996 to December 2015. The large window for item production causes other issues, which we will address in a moment. What Does Products Liability Cover? Products liability insurance is the coverage that would respond to bodily injury and property damage claims caused by products produced by the policyholder. Sometimes this coverage is included in a general liability insurance policy, but for companies that produce large numbers of consumer products it is often stand-alone coverage. This insurance protects against medical claims for bodily injury or illness, financial claims against property damage, and legal defense costs should a claim turn into a lawsuit. A large number of claims due to a product or products could result in a class action lawsuit, like in the case of the Cuisinart recall. With such a lengthy timeline of products being sold, where is the products liability coverage? Which Policy Responds? This is a complex question with many possible answers: All of the Cuisinart blade injuries have been reported in the last several months. Products liability for any bodily injury or property damage may come from the current policy. Or would it? The affected products were sold over a 19 year period. Products liability coverage is typically triggered by a claim, so...
Case Study: Samsung Galaxy Note 7 Product Recall

Case Study: Samsung Galaxy Note 7 Product Recall

In the fall of 2016, Samsung found itself with a problem: the Samsung Galaxy Note 7. Just a few weeks after their latest product was released, consumers were reporting charging problems with the battery. These weren’t just any problems, either. The batteries were catching fire and exploding.  They issued a voluntary recall to anyone concerned about the battery. Samsung thought they had solved the problem by changing battery manufacturers, but the problems persisted.  Soon they issued a formal recall of all Note 7 devices, even going so far as to issue a software update that would render these devices inoperable (though some wireless carriers refused to push the update). Product Recall Coverage Products liability insurance would cover bodily injury and property damage to consumers that were injured by the exploding batteries. This would include damage to clothing, furnishings, or vehicles. Medical expenses related to burns experienced by consumers would also be covered. However, the costs to recall products that may cause damage or injury is usually not covered under a standard products liability policy. That’s where product recall insurance would come in. Product recalls are happening every single day, and they can have a massive impact on the cost of doing business. In December 2016 the Food & Drug Administration (FDA) reported 51 separate product withdrawals or recalls, nearly 2 per day. In the first 8 days of February 2017, the Consumer Product Safety Commission reported 5 product recalls. Costs of Product Recall The Samsung recall affected not only the Note 7 in its first iteration, but also the faulty phones that were issued to replace the original faulty...
Products Liability

Products Liability

Hayes Brokers believes that every business should have insurance.  The type of business you own and the operations of your business will determine the types of insurance policies you will need. If your business makes or distributes products to consumers, it is imperative that your business have either a general liability policy that includes products liability or a stand-alone products liability policy. What Is Products Liability Insurance? Products liability insurance is often referred to as products and completed operations insurance. It is usually, but not always, included in a General Liability or Business Owners Package policy. The Insurance Services Office (ISO) defines a products and completed operations hazard as “‘bodily injury’ or ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’…” (CG0001 Page 15). While this is a standard definition, it may vary slightly by insurance company and policy. It is important to note that products liability covers not only a physical product, but also work product such as building and installation.  This coverage is triggered by bodily injury (including death) or property damage.  However, products liability insurance does NOT cover product recall. Do You Have Products Liability Insurance? The best way to determine if you have products liability coverage is to review your policies with your insurance broker.  While this coverage is often included in some policies, the coverage may be excluded for certain business sectors including those that manufacture or distribute the following types of products: Products for children. Consumables (food and drink). Products that are applied to the body (pharmaceuticals and cosmetics). Medical products. Holistic health...
MMJ Product Recall

MMJ Product Recall

Since cannabis transactions are still only performed in about half of the United States, it seemed that the industry was immune to what other U.S. businesses are facing on a near daily basis: product recall. That is changing.  In Colorado there were 16 product recalls from September through December 2015 covering hundreds of products including candies, concentrates and oils. Most of these product recalls were due to pesticides.  This looks to be just the tip of the iceberg. While products liability insurance will often cover claims and lawsuits for bodily injury and property damage due to faulty products, there is still the matter of all of the other products that were manufactured at the same time or in the same way. Because these products have the potential to cause similar bodily injury or property damage, they would trigger a product recall. Product recall is not covered under products liability insurance, so a separate product recall insurance policy is required. What Is Product Recall Insurance? The cost to businesses to recall or repair faulty product can add up quickly. Consider the costs to do the following: Notify distributors and retailers about the faulty product. Remove the product from store shelves. Reimburse the distributor and/or retailer for the product. Reimburse consumers who purchased the product prior to recall. Transport the product back to the manufacturer. Repair the faulty product or destroy it. Current and future lost revenues due to damaged reputation. From first notification to recall to regaining consumer trust, product recall insurance is designed to protect your business in the event of a faulty or hazardous product. Do You Have...