MJBizMag November-December 2020 - 117

By John Schroyer
NAVIGATING
CLAIMS
INSURANCE
Tips for cannabis companies looking to get the
most out of their business policy after a loss
T
he coronavirus pandemic brought
many businesses to a halt this
spring. Then, in May and June, a
rash of robberies and lootings targeted
marijuana companies. In late summer,
wildfires began destroying cannabis
farms across the West Coast.
All that activity has caused a major
uptick in insurance claims by marijuana
businesses, but the process of getting
paid by an insurance company isn't
always easy or straightforward. There are
often surprises or fights with insurance
carriers who don't want to pay. And the
industry's federally illegal status only
makes the situation murkier.
" Most days, as an insurance-coverage
lawyer, life is pretty boring. Nobody
wants to talk to you. In 2020, I've become
a lot more popular, " quipped Michael
Sampson, a Pittsburgh-based attorney
who specializes in insurance issues
for both marijuana companies and
mainstream businesses.
Marijuana Business Magazine queried
several insurance experts-including
brokers, agents and attorneys who have
fought insurance carriers in court-to
learn how cannabis businesses can get
the most out of their insurance policies
when disaster strikes.
Michael
Sampson
'DON'T TAKE NO
FOR AN ANSWER'
The first rule of thumb when dealing
with insurance carriers, experts say, is to
remember that insurance companies are
for-profit businesses designed to make
money by collecting more in premiums
than they pay out in claims.
That means it's in insurance companies'
interest to look for reasons to deny a
claim-even if the claim is valid.
" You're working against the backdrop
of an industry that's disincentivized
to pay claims, " said Sampson, who has
represented both marijuana companies
and mainstream businesses against
insurance carriers in court.
Filing an insurance claim can be
a lengthy process for cannabis
businesses. But experts say following
through with a claim is often
worth the paperwork and delays
for businesses that have endured
disasters and major losses. Here are
some tips for getting paid:
* Don't take no for an answer. If
you're confident your coverage
requires that a claim be paid, don't
merely accept an initial denial
from the insurance company. If
necessary, consult with an attorney.
* Document everything, including
every loss related to the incident,
and review your policy to make sure
you don't miss any details. Adding
to your claim later is seen as a red
flag by insurance companies.
* Ask your insurance broker or an
attorney for help if you're unsure
about how to proceed. They should
be able to guide you through the
claims process.
* Be ready to negotiate with the
insurance company. The carrier
might try to pay less than the
value of some lost inventory or
equipment, depending on going
market rates.
Experts say business owners who find
themselves in this situation should push
back-with a lawyer, if necessary.
" Don't take no
for an answer, " said
Robert Finkle, a
California-based
attorney who
has dealt with
several marijuana
businesses'
insurance claims
in court.
Finkle pointed
Robert Finkle
out that unnecessary delays in getting
insurance claims paid can occasionally
be the basis for a bad-faith lawsuit.
He and other experts also noted,
however, that the claims process can be a
November-December 2020 | mjbizdaily.com 117
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MJBizMag November-December 2020

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