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Cannabis and insurance

Cannabis is legal now. How does this affect your insurance?

Canada has officially legalized recreational cannabis use as of October 17, 2018. It’s a societal shift that has left many industries scrambling to figure out how to position themselves in this brave new world. How will school curriculum’s introduce education around responsible consumption? How will restaurants incorporate edibles into their menus? What will legalization mean for tourism? How will cannabis products be marketed to the public – a government website for Ontario residents. The big question though, is how are insurance companies responding to this legalization?

cannabis & Auto Insurance

One of the biggest challenges with legalized cannabis, is how to enforce the new drug-impaired driving laws. Police are being trained to detect if you are driving under the influence of a drug and enforce drug-impaired driving laws using Standard Field Sobriety Testing (SFST) and Drug Recognition Expert (DRE) In addition to these tests, the new legislation permits law enforcement to use approved drug screening devices to detect the recent presence of several drugs, including any or all of THC from cannabis, cocaine and methamphetamine. Following a legal roadside stop, police can demand an oral fluid sample and/or conduct an SFST if they suspect you are driving under the influence of a drug.

How does this affect your premium? It’s hard to say at this point since the legalization is so new, but adding another negative variable to your driving habits certainly can’t reduce the number of accidents. If there are more accidents that means there will be more insurance claims as a result, and that’ll increase your insurance premiums. The premiums of the many pay the losses of the few, and there has to be enough money in the reserve to pay out claims.

It’s also worth looking at the other American states (Colorado, Washington, Oregon)  that have recently legalized cannabis, since it’s been legal in those states since 2012. The Insurance Institute for Highway Safety (IIHS) and the American Journal of Public Health (AJPH)  recently conducted studies analyzing the number of claims and their severity. In summary, their combined research found that claims frequency increased by only 0 to 3 percent, but the number of fatal crashes were not increased, and may even been reduced. Does smoking cannabis lead to driving your vehicle at an alarmingly slow rate, while causally bumping into things?

cannabis & home Insurance

Adults over the age of 18 are now legally able to grow, from licensed seed or seedlings, up to 4 cannabis plants for personal use. In past instances, when the growing of cannabis plants were only legal to medical patients, building insurance policies were cancelled outright. There is a certain stigma attached to cannabis cultivation. Insurers incorrectly assumed growing cannabis plants on a small personal scale would result in increased claims due to fire, structural damage, and mold damage. Yes, those problems can occur, but only for illegal large-scale operations. These operations have modified housing climates, overloaded electricity hubs, and large amounts of moisture as a result of irrigation. All of which are done without permits or licensed contractors, since it’s illegal.

If you’re only growing 4 personal cannabis plants, this should not affect the structural integrity of your home, or jeopardize your insurance policy. These plants should be treated as any other household plant in your home. Some insurers are even offering special limits coverage for your plants in the event of a claim. Each insurance company is handling this differently, so please contact your broker for more details regarding your specific policy.

An item that should be of concern is your host liability exposure with cannabis. Let me explain, say you’re having a party at your home and providing alcoholic drinks, and home-grown cannabis and Doritos. Maybe you’re even handing out marijuana edibles that you whipped up yourself. What if someone ate one of your special edibles unknowingly or otherwise, got in their vehicle, and were involved in an accident. The liability would be on you as a host, in the same way that injuries due to alcohol distribution falls back on a home owner or business.

travel Insurance

Travel insurance pertains mainly to emergency health situations while abroad, so there’s relatively little crossover with the legalization of cannabis use in Canada.

The most important thing to remember when it comes to international travel is that recreational cannabis use remains illegal in most countries, so crossing borders with the substance, and even admitting to past use, is strongly cautioned against. Either could result in denied entry or serious criminal penalties.