If your marijuana is broken in a fire, lost in a robbery, or otherwise destroyed, will it be covered under your property owners insurance? The drug is legal for recreational or medicinal purposes in half of the nation, but the insurance sector is nonetheless figuring out how to method marijuana claims.


“There are nonetheless not clear-cut answers on legal marijuana, and insurance risk experience will evolve over time and as much more states legalize it,” says Carole Walker, executive director of the Rocky Mountain Insurance coverage Information Association in Greenwood Village, Colorado.


There’s a lot at stake here. The U.S. legal marijuana industry is valued at more than $ 1.5 billion, according to a report by ArcView Industry Analysis, a San Francisco-based group that specializes in marijuana industry information.


To support you weed through this convoluted issue, here are some variables that could affect no matter whether or not your marijuana will be covered.


Place


The drug is at present legal recreationally in Colorado and Washington, and medicinally legal in 23 states and the District of Columbia. Insurers don’t cover illegal substances, so if you’re from one particular of the 25 other states, you’re out of luck.


“Implied in each policy is insurability of legal subject matter,” says Don Malecki, a principal of Malecki Deimling Nielander & Associates LLC in Erlanger, Kentucky. “If marijuana is not permitted, it will not be covered simply because it will be considered as not getting legal subject matter.”


Quantity


States that have legalized pot in some kind have laws about how considerably can be held at once. If you have far more than the legal amount, your stash won’t be covered.


“In Colorado you can possess no far more than 1 ounce of marijuana for recreational use and grow up to 6 plants—3 of them may be flowering—in an enclosed, locked place,” Walker says.


Moreover, most policies limit coverage to $ 500 per plant, Malecki says.


Insurer


Marijuana coverage under a homeowners policy in the end depends on the insurer.


“There’s nothing in state law that prohibits insurers from covering marijuana losses,” says Kara Klotz, a spokesperson for the Washington State Office of the Insurance Commissioner. “However, it’s also legal for property and casualty insurers to exclude marijuana losses, as long as the exclusion is not discriminatory.”


Klotz adds that her office has received 3 complaints from customers about property owners policies not covering marijuana losses.


Allstate would cover marijuana losses in a state exactly where the drug is legal, and would not exclude coverage of “lawfully possessed amounts of health-related marijuana,” says Amy Allmon, an Allstate spokesperson.


“In Colorado, it would be covered on a property owners policy for the same covered perils something else in your home is covered for,” she says. “It would be treated just as any other private home that someone has.”


Farmers Insurance coverage Group evaluates marijuana claims on a case-by-case basis, says Trent Frager, a spokesperson for the business.


“Policyholders must be conscious that any losses involving marijuana will be investigated taking into account a number of elements, which includes nearby, state and federal laws and regulations,” Frager says.


Federal conflict


Although common homeowners insurance coverage policies are written such that marijuana would be covered if legally held, it’s not constantly covered, says Brenda Wells, director of the threat management and insurance coverage system at East Carolina University. Many insurers cite the federal illegality of the Schedule 1 drug to keep away from in fact covering it.


“Courts are allowing insurers to deny coverage of it due to the fact it is nonetheless illegal at the federal level,” Wells says. “But you do have an inherent conflict among federal law and state law.”


There have been at least 2 court situations on this concern so far, Wells says. In both situations, courts sided with the insurers and the property owners didn’t get coverage.


Covering your cannabis


A distinct insurance marketplace has emerged to cover growers, distributors and retailers in the marijuana sector. Insurers contain Cannassure, based in Westlake, Ohio, and Cannarisk in Seattle. Various policies exist to cover almost everything from seed-stage plants to edible manufacturers and bakeries.


Because cannabis coverage beneath homeowners insurance coverage is nonetheless unclear, shoppers should seek the advice of their providers.


“Our guidance to shoppers who want to make confident losses of marijuana and marijuana plants are covered is to study their policy and talk to their agent or broker,” Klotz says.


Marijuana cigarette image via Shutterstock.