A company in the state received a historic payment following crop damages from wildfires.
A cannabis insurance payout has recently broken prior records in California. The Thomas Fire burned through a legal marijuana business at the close of last year (and the start of this one). The payout for the insurance claim was $1 million – higher than any previous payout in this category.
This wildfire insurance payout is an indicator of the speed of growth of the legal marijuana industry.
A Southern Californian cultivator of marijuana was covered by a cannabis insurance company, which remained unnamed but was based in Great Britain. The marijuana insurance policy paid the company for the crop damages experienced when the wildfires plagued California.
The policy was created through the assistance of Matt Porter, a Cannabis Insurance Professionals vice president. That group is a division of Brown & Brown Insurance. The insurance provider is among the largest global insurance intermediaries. Porter explained that he based the policy’s language on other forms of agriculture and crop insurance coverage. That said, it was altered and adjusted to focus on some of the risks more unique to the cannabis industry.
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The wording in the cannabis insurance helped contribute to the size of the payout the company received.
“This policy contained some wording related to what we consider atmospheric change, or contaminants coming into the greenhouse,” said Porter. That wording, said Porter, was critical. The reason is that it wasn’t necessarily the flames that did all the damage to the crop.
Instead, according to Porter, ash from the Thomas Fire had been “falling like snow” and it made its way into the company’s greenhouses. The result was that the plants became contaminated with toxic chemicals even though they were inside.
That said, the special crop insurance was not cheap for the cannabis company. Porter declined to name the provider, but he did specify that the policy’s premium was $30,000. Moreover, the policy’s deductable was $25,000. That said, the payout was big enough that it is considered to be unprecedented and the largest in the history of the cannabis insurance industry.