A cultivation facility near Lakeland loses an entire grow room when a dehumidifier fails over a holiday weekend and mold spreads through the crop. The owner files a claim expecting the property policy to pay for the plants and the lost harvest. The adjuster points to three provisions: growing plants are excluded, mold is excluded except for a small sublimit, and the equipment failure is not a covered cause of loss without equipment breakdown coverage. Every one of those exclusions was in the policy from the start. Cannabis policies are built around exclusions, and knowing them before a loss is the only way to close the gaps.
Growing Plants and Crops
Most property policies do not cover growing plants at all, and cannabis policies are no exception. Some specialty markets offer coverage for plants in the ground or in grow rooms, but it is usually limited to specific causes of loss, subject to sublimits and valued on a defined basis rather than the retail price of the finished product. Finished and packaged inventory is easier to insure, but the valuation still matters, and many policies value inventory at cost rather than at selling price.
Mold, Pests and Contamination
Mold is one of the most common causes of crop loss in Florida’s humidity, and most property policies exclude it or cover it only under a small sublimit. Pest infestations and gradual contamination are usually excluded as well. On the liability side, product liability policies may exclude claims from contaminated products when testing requirements were not followed, so testing records are part of keeping the coverage intact.
Equipment Failure and Electrical Problems
A standard property policy covers sudden physical damage from causes like fire or wind, but it does not cover the mechanical or electrical breakdown of equipment on its own. Lighting, HVAC, dehumidification and irrigation systems are the heart of a grow facility, and equipment breakdown coverage is what responds when they fail. Carriers also look closely at electrical work, and losses caused by wiring that was not installed to code can lead to disputes or denials.
Product Recall and Product Quality
Product liability covers injuries and damage caused by a product. It does not pay to pull products off the shelves, destroy them or notify customers. That is product recall coverage, which is purchased separately. Claims that a product simply did not work as expected, or did not have the potency on the label, may also fall outside product liability depending on the policy language.
Government Action and Regulatory Penalties
Policies generally exclude fines and penalties, and they exclude losses caused by government seizure or destruction of property. Because cannabis remains illegal under federal law, many policies also contain language limiting coverage for losses related to federal enforcement. A license suspension that shuts down operations usually does not trigger business income coverage, because there was no physical damage to property.
Cash, Employee Theft and Crime
Property policies typically limit or exclude money and securities, and employee theft is excluded unless the business carries crime coverage. Even crime policies have conditions, such as requirements for safes, alarms, armored transport or dual control over cash, and failing to follow them can reduce or eliminate coverage. Our article on cash, crime and security coverage for dispensaries covers those conditions in detail.
Business Interruption Gaps
Business income coverage pays for lost income after physical damage from a covered cause. It does not respond to regulatory shutdowns, loss of a supplier that is not scheduled, a crop failure that is excluded or utility outages that originate away from the premises unless that coverage is added. Florida operations should pay particular attention to how long the period of restoration is and whether it reflects how long it would actually take to rebuild and replant.
Worth Confirming on Your Policy
- Are growing plants covered, and how are plants and finished inventory valued?
- What does the policy say about mold, and is there a sublimit?
- Do you carry equipment breakdown coverage for lighting, HVAC and dehumidification?
- Is product recall coverage in place separately from product liability?
- Does crime coverage include employee theft and money in transit, and what conditions apply?
- Does business income include utility service interruption and a realistic restoration period?
Talk to Prestige Insurance Group
We review cannabis policies line by line before they are bound, so the exclusions are known in advance and the gaps that matter can be filled. See our cannabis insurance page for an overview of the full program. Call the office nearest you. Se habla español.
Orlando: 407-993-2331
Miami: 305-969-8776
This article is general information and not legal advice. Policy language varies by carrier; refer to your policy for the terms that apply to your business.
