No one enjoys paying for insurance. It's something everyone needs, but doesn't really want. Only when there is a loss do most people really see the value of insurance coverage. Insurance cost is a big concern for most businesses, especially new ventures. Unfortunately, many businesses look at price before coverage. So, what does having the wrong coverage cost?
Here are some examples on how the wrong insurance coverage for your cannabis business can put you out of business:
- You buy the wrong limits trying to save money. In theory this sounds like a reasonable idea... Say you have inventory of $500,000, but decide to tell your insurance company you only have $250,000. There is a good chance that you will have a co-insurance penalty for understating your property values. You may be expecting a check for $250,000, but when the carriers finds out your were grossly under-insured, you may only receive a fraction of that.
- Your policy may not actually be protecting you like you think... Insurance is complicated. You may have a separate policy for general liability, property, cargo, workers' compensation, umbrella, etc. and each policy can be upwards of 100 pages. You could think your property policy covers your goods in transit or your general liability covers your product... You really need to understand what you are buying, otherwise that could be a very expensive stack of policies that doesn't do much for you.
- You may not understand the right coverage for your business and aren't guided by a professional broker that understands your business. Similar to above, you may need help to simply understand insurance basics. You don't want to be oversold as much as undersold coverage. Having someone breakdown insurance basics first so you can identify where you need help is extremely important. You want to know what exactly your premium is going towards to make you feel more comfortable about the insurance buying process.
Chances are that you have invested thousands to hundreds of thousands in your business. You may not like paying for insurance, but surely understand its importance. Most businesses can't afford to self insure a large loss (self insure here means that you bank assets to offset future losses out of pocket). Getting the right insurance program in place to protect your unique business and needs is something that is worth investing time into so that when you have a large loss you will be able to keep your door open. At Cannabis Insurance Associates, we pride ourselves in guiding our clients through the process of risk detection, mitigation and insurance. If you have any doubts about your current insurance, please contact us for a complimentary consultation.