“Mosaic Insurance Alliance has professional insurance insight on what you can do against the coronavirus”
The coronavirus’ impact on the cannabis industry has been evident since the beginning.
When quarantine first happened, many retail stores experienced decreased sales, processors were having difficulty securing necessary supplies from China, and even growers faced the challenge of reduced sales. Many cannabis companies are still experiencing these issues. If you find that those issues still apply to you, or you are suffering from other COVID-related loss, read on for some guidance on what can you to do help protect your investments.
A Natural Question Is: Do I Have Insurance Coverage for Lost Income Associated with The Pandemic?
The answer can be complicated, and only the carrier can make those decisions, ultimately. There must be a covered loss to trigger payment by business interruption coverage—also known as business income insurance—which is the type of policy that covers lost income. If there is not a covered loss, business interruption coverage will likely not respond to a claim for lost income. In general, loss caused by, or resulting from, viruses capable of inducing illness or disease are not covered under property policies. However, we’re in uncharted waters right now and it’s up to the insurance company to decide if a loss is covered.
Property policies cover direct loss or resulting damage to covered property from a covered cause of loss—e.g., a fire. Some policies also cover business interruption that results from direct damage of a covered loss, such as a fire that destroys a retail store that is then forced to close until repairs are made. In a situation like a covered fire, the company’s business interruption policy would cover items like lost profit, and any ongoing fixed expenses, including salaries, rent, and interest on loans. In addition, most business interruption policies include coverage if a covered direct physical loss occurs to a neighboring property which then leads to a civil authority shutting down the insured’s business. For example, if the Fire Marshall restricts access to the area where your business is located so that nearby damage can be cleaned up and the property secured, your interruption policy may cover items like your lost profits during the closure.
Unfortunately, most property policies have a specific exclusion for any virus-related damages. That being said, if civil authority responds to a virus epidemic by forcing a business to close, there isn’t really damage to the property. If there is no covered property loss, then business income would likely not apply.
Each scenario may be unique, and the specific circumstances of the event will determine if a covered loss has occurred. If a covered loss has occurred, it will trigger the business interruption coverage. If your policy includes business interruption coverage, it may be worthwhile to put your insurer on notice of a potential loss. If you have any questions, I am here to help find answers and point you in the right direction! You can find my contact information here.
While cannabis businesses may not have insurance for lost income, the state or Federal Government may make grants or low interest loans available to impacted businesses. Carefully document any lost profit or other expense incurred because of the pandemic. Doing so now will make submitting a claim easier as well as help support it.
Do you think you have a claim to file? Or, do you want to dig a little deeper and review your business policies? Perhaps you have not yet worked with Mosaic, and you would like a free quote. Whatever you need, I can help you go over your coverage and see what you are and are not covered for! Even though it might be a while before I can see you in-person with the social distancing cautions intact, I have a home office fully equipped and I am ready to help you Monday-Friday, 8:30am-5:00pm. I am just a phone call or email away, and I would be more than happy to answer any questions or concerns that you might have. We are in this together!
YouTube Videos to Address Your Insurance and Risk Management Plans During COVID-19
It is encouraging to see the cannabis industry fight to maintain stability in the face of disruption. Your supply chain has most likely faced interruptions, and these unprecedented economic conditions continue to change on the fly. Yet, you are doing all that you can to carry on for your customers and employees. Our thoughts are with those who have been impacted by this crisis, and we are committed to helping you navigate this difficult period. To that end, we are producing a series of cannabis YouTube videos to address how your insurance and risk management plans can support the continued operation of your business.
What can we do to help you avoid disruption in your customer service? If there is anything that you think we can help you with, we are here and ready to listen. Give us a ring or shoot us an email if you have questions about current coverage or claims, you want to search for additional coverage, or if you think there is something else that can help your business during this epidemic.
In our first cannabis video, I answer this question I have received from numerous clients: “Steve, how is my insurance policy going to respond to the losses that I am experiencing due to the COVID-19 outbreak?” We have also created a cannabis-specific playlist called Cannabis Insurance 411 that will have additional videos added to it overtime. Follow our YouTube channel for more videos, and if you have any video requests, we are all ears!
Stay safe, friends!