With ever-changing regulations and laws within the cannabis industry, you don’t want to leave your business vulnerable. That’s why it’s extremely important to protect yourself and your business with the proper coverage. Product liability claims can be devastating for cannabis businesses, but fortunately, business owners now have the ability to protect against the potentially catastrophic losses associated with lawsuits. Here, GreenWrap Insurance Solutions takes a closer look at what product liability insurance is and what this type of policy may cover.
The Basics of Product Liability Insurance
Product liability insurance provides coverage in the event you are found liable due to a defective product, whether you manufacture or sell the product to a consumer. This type of policy is designed to protect your company from first-party and third-party claims of bodily injury, property damage, and other damages related to the products and services your company sells. These claims can consist of:
- First-party claims: This refers to any type of claim arising from an accident, injury, or loss caused by manufacturing defects, improper labeling, and failure to warn consumers about a wide variety of potential hazards.
- Third-party claims: This refers to any type of claim that could hold a business liable for damages that result from the use of a product by a consumer.
For cannabis companies, this can include incidents such as:
- Contaminated marijuana that was purchased from a third-party vendor and resold to retail customers. Note: this may require pollution coverage as well.
- Selling edibles that cause food poisoning or another type of illness due to poor quality standards.
- False advertising or misleading claims made through a company’s marketing campaign that cause harm under covered perils.
- Product Recall due to poor ingredients or other manufacturing issues
Exclusionary Language and the Importance of Coverage
As marijuana becomes legalized globally, there has been an increase in the number of cases brought up that deal with accusations of defective cannabis products, as well as new guidelines and regulations that have caused product recalls. Furthermore, as the cannabis industry is not regulated on a federal level, states are left up to create their own legislation. Many cannabis businesses are easy targets for potential lawsuits.
It is also not uncommon for cannabis companies to purchase an insurance policy with exclusions. The exclusionary language leaves your company exposed to lawsuits that can directly impact operations and the survival of the company as a whole. It’s vital for any policy you obtain to provide the coverage your business needs to thrive.
Advantages of Working with a Specialized Cannabis Insurance Agency
As regulations within the industry evolve, cannabis industries need to protect themselves from any potential risks. A specialized cannabis insurance agency can help ensure your business is properly covered with the necessary policies.
With general liability, professional liability (E&O), product liability, property, directors and officers (D&O), and cyber/data breach coverage, as well as other insurance products, GreenWrap Insurance Solutions offers policies for a wide variety of coverage needs. To learn more about the insurance policies we offer to cannabis businesses in North America, the Caribbean, Europe, and sectors of Latin America, please contact us today.