Pot Raid Coverage?

February 14, 2011

Sometimes we forget just how unique our economic system is. We also might not appreciate how responsive insurers can be to the insurance consumer market place. Sometimes we have to stand back and give insurers credit for what they can do in coming up with strategies to improve the bottom line.

As an example of insurer response to the marketplace, we now have the first-ever policy endorsement to cover government action. This “pot raid coverage” can protect dispensaries, collectives, cooperatives, cultivators and caregivers within the laws permitting the use of medical marijuana.

“We found that legitimate businesses were having difficulty restarting things after going through something like a raid or arrest or search warrant,” said Mike Aberle, national director of MMD Insurance Specialists, an offshoot of Sacramento, Calif.-based commercial broker Statewide Insurance Services.

The word “legitimate” is important to the coverage, which provides defense, court and investigation costs to business owners only if and after they are proven not guilty of all raid-related charges, Mr. Aberle said. The distinction is crucial to adhering to insurance law.

According to “Property Casualty 360”, an insurance industry update service, clients signing up for “Pot Raid Coverage”. can also obtain general liability, property insurance for stock and equipment, workers’ compensation, commercial auto, crop insurance, and more.

Business appears to be going well. And, since there are not a lot of historical trends that the actuaries can depend on it setting rates, we can expect more of the same --- as long as the underwriting remains unprofitable. Without profit, this coverage will be gone in a minute.

Insurance companies are not always altruistic. They are looking to make a buck.