WIN Magazine - Fall 2017 - 19

marketplace. Just as individuals risk
financial ruin if they fail to purchase auto,
homeowners or medical insurance to fiscally protect themselves, no commercial
enterprise can expect to operate well or
for long without insurance products in
their risk-transference arsenal.
The question facing new businesses
and their insurers then becomes: Can
there ever be coverage for an activity
that constitutes a federal crime? The
answer appears to be yes - at least for
now, depending on the venue.
In Tracy v. USAA (2012) WL928186
(F. Supp. 2d), a federal court in Hawaii
ruled that a homeowners policy does
not cover the theft of marijuana plants
grown for medical use because use and
cultivation of marijuana, even for state
law-sanctioned medical purposes, violates federal law.
But the judiciary appears to be changing
along with the voters' acceptance of marijuana use. In Green Earth Wellness Center,
LLC. v. Atain Specialty Insurance Company
2016 WL 632357, a Colorado dispensary
sued its insurer after the carrier denied
its claims for the theft of processed marijuana flowers, and damage to its plants
from soot and ash from a nearby wildfire
that infiltrated the ventilation system. The
claims were denied based upon a "contraband" exclusion in the policy and Atain
asserted federal public policy made it illegal to compensate the insured. The court
carefully looked at the policy, underwriting documents and intent of the carrier
and insured, and found that Atain knew
the insured was a cannabis business,
and there was no showing Atain sought
to exclude coverage for finished inventory and harvested plants (as opposed to
crops). As Atain collected premium and
issued the policy to a cannabis dispensary,
coverage was afforded under the policy.

Coverages:
Personal Lines
Coverages
AUTO INSURANCE

There are differences of opinion about
whether legalization of marijuana

INSURABLE RISKS FACING
MARIJUANA GROWERS
AND DISPENSARIES
* General liability - products
liability coverage
* Property protection
* Business income/extra expense
insurance
* Marijuana stock
* Marijuana crop - live plants
* Workers compensation
* Commercial auto
* Cargo
* Money and securities
* Government actions
* Vendors
* Special events

RISKS FACING INSURERS
* New line of coverage with lack of
historical pricing and loss data
* Conflicting state and federal law

increases the frequency and severity of auto accidents. According to the
Highway Loss Data Institute, the number
of auto collisions in Colorado, Oregon
and Washington, three states where recreational use is legal, have increased
higher than expected when compared
to their neighboring states. While the
study cannot say with certainty that
the increase was related to marijuanaimpaired drivers, the statistics indicate
collision claims since marijuana legalization increased 16 percent in Colorado,
6.2 percent in Washington and 4.5 percent in Oregon. The AAA Foundation for
Traffic Safety's study found the percentage of drivers involved in fatal crashes
in Washington who recently used marijuana more than doubled from 8 percent
to 17 percent between 2013 and 2014. One
in six drivers involved in fatal crashes
in 2014 had recently used marijuana.
Tetrahydrocannabinol (THC), the
main chemical component in marijuana
that can impair driver performance and
influence the mind, affects people differently. This makes it challenging to
determine consistent and fair guidelines

for assessing impairment. Some states
have set a legal limit for impaired driving
at 5 nanograms of THC per milliliter of
blood. While the 0.08 standard for alcohol impairment has been established
by scientific research, there is no such
standard to determine THC impairment
and no breathalyzer type of instrument
to quantify it.
Arrests or convictions for drug-related
charges don't automatically get reported
to the DMV or result in the suspension
or revocation of a driver's license. This
will make it difficult for auto-insurance
underwriters to get an accurate picture
of an insured's or potential insured's
driving habits.

HOMEOWNERS, FIRE
DWELLING, RENTERS AND
LANDLORD INSURANCE
Under a standard ISO HO 00 03  -
Homeowners 3 - Special Form; an
ISO HO 00 04 - Contents Broad Form
(renter's) policy; and an ISO DP 00 03
Dwelling Property 3 - Special Form policy there is coverage for trees, shrubs
and other plants, including cannabis,
for several perils that may impact the
home marijuana grower. All of these
policies afford coverage for fire, vandalism or malicious mischief. The HO 00 03
and HO 00 04 also add coverage for the
peril of theft. These additional coverages come with a sublimit as a percentage of the primary coverage limits and
a $500 per tree, shrub or plant limit.
The average adult shrub is valued at
approximately $3,000 depending on the
strain. Items insurable but not subject
to a sublimit are marijuana seeds (some
sell for as much as $1,000-$1,500 per
packet), dried marijuana, grow equipment and paraphernalia.
Landlords have been left with severely
damaged properties from tenants' legal
or illegal grow operations. These risks
include a higher likelihood of fire due to
electrical issues, water and mold damage
from irrigation and hydroponic operations, vandalism and burglary claims.
Claims to repair grow-house damages
can range from $25,000 to $150,000 plus.
F A L L 2017 | 19



Table of Contents for the Digital Edition of WIN Magazine - Fall 2017

Do Hurricanes Have a Silver Lining?
Underwriting Marijuana
The Cyber Insurance Conundrum
Writing Data Security Into Law
Gauging Risk, Reaping Reward
Simply Seamless
Moving to the Cloud: 3 Migration Strategy Models and the 6 R’s.
In the WIN-NER’s Circle
WIN Magazine - Fall 2017 - Intro
WIN Magazine - Fall 2017 - bellyband1
WIN Magazine - Fall 2017 - bellyband2
WIN Magazine - Fall 2017 - cover1
WIN Magazine - Fall 2017 - cover2
WIN Magazine - Fall 2017 - 3
WIN Magazine - Fall 2017 - 4
WIN Magazine - Fall 2017 - 5
WIN Magazine - Fall 2017 - 6
WIN Magazine - Fall 2017 - 7
WIN Magazine - Fall 2017 - 8
WIN Magazine - Fall 2017 - 9
WIN Magazine - Fall 2017 - 10
WIN Magazine - Fall 2017 - 11
WIN Magazine - Fall 2017 - Do Hurricanes Have a Silver Lining?
WIN Magazine - Fall 2017 - 13
WIN Magazine - Fall 2017 - 14
WIN Magazine - Fall 2017 - 15
WIN Magazine - Fall 2017 - 16
WIN Magazine - Fall 2017 - Underwriting Marijuana
WIN Magazine - Fall 2017 - 18
WIN Magazine - Fall 2017 - 19
WIN Magazine - Fall 2017 - 20
WIN Magazine - Fall 2017 - 21
WIN Magazine - Fall 2017 - 22
WIN Magazine - Fall 2017 - 23
WIN Magazine - Fall 2017 - The Cyber Insurance Conundrum
WIN Magazine - Fall 2017 - 25
WIN Magazine - Fall 2017 - Writing Data Security Into Law
WIN Magazine - Fall 2017 - 27
WIN Magazine - Fall 2017 - 28
WIN Magazine - Fall 2017 - 29
WIN Magazine - Fall 2017 - 30
WIN Magazine - Fall 2017 - Gauging Risk, Reaping Reward
WIN Magazine - Fall 2017 - 32
WIN Magazine - Fall 2017 - 33
WIN Magazine - Fall 2017 - 34
WIN Magazine - Fall 2017 - 35
WIN Magazine - Fall 2017 - Simply Seamless
WIN Magazine - Fall 2017 - 37
WIN Magazine - Fall 2017 - Moving to the Cloud: 3 Migration Strategy Models and the 6 R’s.
WIN Magazine - Fall 2017 - 39
WIN Magazine - Fall 2017 - In the WIN-NER’s Circle
WIN Magazine - Fall 2017 - 41
WIN Magazine - Fall 2017 - 42
WIN Magazine - Fall 2017 - cover3
WIN Magazine - Fall 2017 - cover4
WIN Magazine - Fall 2017 - outsert1
WIN Magazine - Fall 2017 - outsert2
WIN Magazine - Fall 2017 - outsert3
WIN Magazine - Fall 2017 - outsert4
https://www.nxtbook.com/naylor/AMGQ/AMGQ0118
https://www.nxtbook.com/naylor/AMGQ/AMGQ0417
https://www.nxtbook.com/naylor/AMGQ/AMGQ0317
https://www.nxtbook.com/naylor/AMGQ/AMGQ0217
https://www.nxtbook.com/naylor/AMGQ/AMGQ0117
https://www.nxtbook.com/naylor/AMGQ/AMGQ0416
https://www.nxtbook.com/naylor/AMGQ/AMGQ0316
https://www.nxtbook.com/naylor/AMGQ/AMGQ0216
https://www.nxtbook.com/naylor/AMGQ/AMGQ0116
https://www.nxtbook.com/naylor/AMGQ/AMGQ0415
https://www.nxtbook.com/naylor/AMGQ/AMGQ0315
https://www.nxtbook.com/naylor/AMGQ/AMGQ0215
https://www.nxtbook.com/naylor/AMGQ/AMGQ0115
https://www.nxtbook.com/naylor/AMGQ/AMGQ0414
https://www.nxtbook.com/naylor/AMGQ/AMGQ0314
https://www.nxtbook.com/naylor/AMGQ/AMGQ0214
https://www.nxtbook.com/naylor/AMGQ/AMGQ0114
https://www.nxtbook.com/naylor/AMGQ/AMGQ0413
https://www.nxtbook.com/naylor/AMGQ/AMGQ0313
https://www.nxtbook.com/naylor/AMGQ/AMGQ0213
https://www.nxtbook.com/naylor/AMGQ/AMGQ0113
https://www.nxtbookmedia.com