Are You Troubled With This Exclusion?

Sep 8, 2018

  1. AZDave
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    AZDave Guru

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    I was looking at a Carriers GL forms and endorsements and noticed a new one to their list. Clearly the insurance companies do not want the liability for cannabis business operations, but this goes quite a bit further.

    Anyone else seeing similar exclusions on GL policies?




    THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.


    EXCLUSION – ABSOLUTE MARIJUANA OR MARIJUANA PRODUCT OR MARIJUANA DELIVERY DEVICES


    The Exclusion Section of each Coverage Part provided under this policy is amended to add the following:




      • A. This Insurance does not apply to any:

    1. Any injury or damage, including any judgment, settlement, loss, cost or expense arising out of the ownership, possession, operation, handling, maintenance, use, sales, transfer or entrustment to others of any "marijuana or marijuana product" or "marijuana delivery device";


    2. Any injury or damage, including any judgment, settlement, loss, cost or expense arising out of the exposure to any "marijuana or marijuana product" or "marijuana delivery device" on any premises that permits the use of such product or device;


    3. Damages, loss, cost or expense arising out of any actual, alleged or threatened:


    a. Contaminative, pathogenic, toxic or other hazardous property of any "marijuana or marijuana product" or "marijuana delivery device"; or


    b. Defect, deficiency, inadequacy or dangerous condition in any "marijuana or marijuana product" or "marijuana delivery device"


    c. Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of any "marijuana or marijuana product" or "marijuana delivery device"


    d. Claim or "suit" by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of any "marijuana or marijuana product" or "marijuana delivery device"



    1. B. This exclusion applies even if the claims against the insured allege negligence or other wrongdoing in the supervision, instruction, recommendations, hiring, employment, training or monitoring of others by that insured, warnings or advice given or which should have been given in connection, and which caused the injury or damage or the offense which caused the injury in connection with the Paragraph 1. of this endorsement.


    1. C. This exclusion includes any obligation to share damages with or repay someone else who must pay damages because of such injury or damage.


    1. D. The following definitions are added and replace any similar definitions contained therein.



      1. 1. "Marijuana delivery device" includes, but not limited to, any a. Cigarette or Paper Wrapped Joints b. Cigars

        • c. Pipes, Bongs, or Hookahs

        • d. Personal Vaporizer
      2. e. Other type of smoking delivery vessel or device by whatever name known, including any component, part or accessory;
      3. f. Good, product, service, advice or instruction for the cessation of a "marijuana or chemical delivery device."

    IL990054 1017 Page 2 of 2


    g. Vapor, smoke or other liquid, gaseous or thermal by-product or residue of marijuana, or other chemical, mineral, good or product applied to, found within, sprayed on or used in connection with the foregoing.


    2. "Marijuana or marijuana product" includes, but is not limited to, any:



    1. a. Plant of the genus cannabis (herein referred to as "marijuana") by whatever name known, including its presence or use in a cigarette, joint, pipes, bongs, vaporizer, edible, oils or in chewing or smoking as in snuff;


    1. b. Chemical, mineral or other material, good or product applied to, found within, sprayed on or used in connection with tobacco;


    1. c. Filter, paper, pipe, wrapper or any other marijuana - related accessory;


    1. d. Marijuana good, product, service, advice or instruction; or


    1. e. Smoke, or other solid, liquid, gaseous or thermal by-product or residue of tobacco or in connection with any of the foregoing.
     
    AZDave, Sep 8, 2018
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  2. adjusterjack
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    adjusterjack Guru

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    It's a crime at the federal level and tolerated for medical licenses or decriminalized at some state levels so it's no surprise that standard lines companies are eschewing coverage.

    Fortunately, the coverage for the cannabis industry seems to be readily available from specialty carriers:

    marijuana liability insurance at DuckDuckGo
     
  3. AZDave
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    My point is, 1. This is a first for me - haven't seen this exclusion on commercial policies; and 2. Just a reminder that the Agent needs to look at the forms and endorsements that go along with the quote, not just the quote.

    This came from a carrier that insures contractors, and they are quite a bit lower than my other quotes. However, with this endorsement, plus the handful of other unique exclusions that they include, the coverage is restricted so much that it just may not be worth even mentioning this quote to my insured.

    Give the company and the adjuster a chance to deny the claim, and they will!
     
    AZDave, Sep 9, 2018
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  4. InsCommentary
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    I blogged about QCing the delivered policy last week:

    Policy Deliverables | Insurance Commentary with Bill Wilson

    A couple of weeks ago I did a webinar called “Finding and Fixing Commercial Lines Coverage Gaps” that gave dozens of examples of endorsements carriers add to policies that the agency didn’t ask for. This is particularly common in the construction industry, especially the E&S marketplace.
     
  5. Web320
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    Web320 Expert

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    100% agree.

    Sending you a PM with some information. Let me know if we can help you out and I will put you in touch with one of our underwriters.
     
    Web320, Sep 10, 2018
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  6. Andle
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    Andle Expert

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    Standard markets are attaching similar to GL policies in the pacific northwest at renewal. The one that scares me the most excludes BI, PD, PAI, arising out of, caused by, or attributed to, whether in whole or in part: The design, manufacture, distribution, sale, serving, furnishing, use or possession of "marijuana"

    So, a contractors employee puffs the magic dragon off the clock, then causes an injury typically covered by GL, then tests positive, results in a decline. Very general description, but given the opportunity the carrier will decline.
     
    Andle, Sep 10, 2018
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  7. AZDave
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    ^^ That's my thinking. Very broad.
    This admitted Carrier happens to be from your area too. There's a reason they are less than the others!
     
    AZDave, Sep 10, 2018
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  8. Andle
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    Andle Expert

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    The funny thing is, this carrier is typically the broadest regarding coverage, not the cheapest. With aggressive rate increases and these broad exclusions they are becoming carrier B or C for my smaller accounts.
     
    Andle, Sep 13, 2018
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  9. Brett Arthur
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    Brett Arthur New Member

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    There now are agencies popping up that have ways to provide coverage, I in fact have a source for them on the work comp side through the PEO model. Almost a perfect model for it, as they can handle the back office stuff as they grow so fast & some help with keeping up with compliance. I'd be happy to provide any info needed to get in touch.
     
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