Does home insurance cover cannabis? The answer may make you furious

Does home insurance cover cannabis? The answer may make you furious

While cannabis is still classified as a highly dangerous drug at the federal level, there’s no denying that cannabis is big business.

Cannabis is one of the fastest growing industries in the country, with a record $17.5 billion in revenue last year, an increase of 46% compared to the previous year.

Since an ounce of marijuana can cost hundreds of dollars, you might be very interested to know if your home insurance policy would protect you if your cannabis were ever stolen or destroyed. After all, most policies cover trees and houseplants, so why not cannabis?

The current situation is complicated to say the least – and once you learn the truth about your policy, you may decide it’s time to look for a better one.

Which costs can be covered?

One dollar bill among hemp buds.  Close-up of cannabis and American moneyOne dollar bill among hemp buds.  Close-up of cannabis and American money

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First of all, it’s important to note that any medicinal or recreational cannabis that you hope to protect must be legal to possess.

In the case of 2011 Barnett v. State Farm, the courts ruled that State Farm was not required to cover plants seized by police for exceeding the allowable limit in California.

Assuming your button is on the rise, your homeowners insurance policy can cover you in two ways:

Protection of personal property

This type of coverage helps you replace all types of stolen or damaged property, including furniture, electronics, art, jewelry, and more.

Your policy states coverage limits for different types of products. Coverage for trees, plants and shrubs is generally limited to about $500 each, according to the Institute for Insurance Information.

The tricky part is figuring out how your insurance company would classify your items and how it would decide what they’re worth.

In the case of 2012 Tracy v. USA, the insurer offered $8,800 to cover the loss of 12 medical marijuana plants — a much lower amount than the $45,600 the owner had requested. The owner filed a lawsuit, but the courts ruled that since cannabis is still federally banned, USAA was not at all obligated to cover the loss.

Liability Protection

This type of coverage helps protect you from lawsuits for injuries or property damage you cause to other people.

If your policy contains the correct cover – and cannabis use is not out of the question – you may be protected from expensive bills in the event that someone overeats at a party at your house.

Limits of liability generally start at about $100,000.

Why is legal cannabis not always included?

Washington DC Capitol dome detail with waving American flagWashington DC Capitol dome detail with waving American flag

Andrea Izzotti / Shutterstock

Since the federal government still considers cannabis a Schedule 1 substance — a drug with “currently no accepted medical use and a high potential for abuse,” such as LSD or heroin — many insurance companies want nothing to do with it.

That’s doubly true if the insurer operates in more than one state.

As a result, it is common for cannabis plants and products to be specifically excluded from homeowners’ insurance policies.

Even if an insurer is willing to cover cannabis, you rarely see them openly admit it. Allstate made headlines in 2014 when it told Colorado residents they were in good hands.

Despite the obvious inconvenience of most insurers, it’s still worth making a claim if your legal weed has been stolen or destroyed.

Ownership limits are so small in many states that your company may not bother to fight your claim. And several states, such as Oregon, have passed laws that make it illegal to refuse a contract on the basis that cannabis is illegal under federal law.

How to make sure you’re protected

Serious man making a phone callSerious man making a phone call

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As cannabis laws evolve, so will insurance companies. It is likely that providers will be less hesitant about whether or not to insure your cannabis in the coming years.

For now, the easiest way to find out if your insurer is behind you is to look at your individual policy – or better yet, call the company and ask.

If the answer is no, or if you don’t get a clear answer at all, it may be time to switch to another insurer.

It’s a good idea to compare home insurance, in any case, because you could discover significant savings with another provider. The Insurance Information Institute recommends looking around every six months for better rates.

If it’s been much longer since you last compared quotes, you may be paying $1,000 or more too much for your policy. The the same goes for car insurance.

Even if your insurer covers cannabis, it’s worth taking a moment to make sure you’re paying a fair price for the protection your policy offers.

This article provides information only and should not be construed as advice. It comes without any kind of warranty.