As a CBD business owner, you may be worried about acquiring various types of business insurance regarding your CBD products. This is because many places still regard CBD (in some forms) to be illegal. As such, you could be liable and open yourself up to many lawsuits. Let’s see what insurance you can get as a CBD business owner.
CBD businesses are covered by insurance if their CBD-based products meet regulations. That is, all hemp and CBD-based products may only contain 0.3% THC. If so, the CBD business is eligible for product liability, inland marine coverage, employee benefits liability insurance, and more.
This article will discuss what type of insurance you are eligible for as a CBD business owner. It will also cover the caveats and what precautions you need to take as a CBD business owner.
Does insurance cover CBD?
CBD is one of the fastest and largest growing global industries in the world, currently generating billions in revenue each year. As with any business, insurance plays an enormous role in covering the manufacturer for their tools, equipment, employees, etc., in terms of damage, theft, fire, etc. Additionally, insurance offers product liability insurance (which we will discuss) which is protection against claims of bodily injury or property damage from customers.
Since CBD is still relatively new on the market (and is still considered illegal in some regions), many business owners need to know what insurance policies are available for CBD businesses.
In fact, CBD businesses and their products are eligible for many types of business insurance. However, there are conditions. Let’s look at what CBD business insurance entails, what the insurance companies are willing to cover, and what restrictions you will have as a CBD business owner. [1]
CBD business insurance
Many insurance companies are aware of the fact that the growing CBD business industry is in need of proper insurance coverage, which can include;
- Inland marine coverage
- Hired and non-owned auto coverage
- Employee benefits liability
- Product liability [2]
CBD business owners may deal with severe repercussions if they do not obtain some form of coverage. In 2019 Central Oregon had a hail storm that damaged approximately $25 million worth of hemp crops. [3]
What are CBD business insurance curtailments (catches)
Even though CBD is receiving more global recognition for its health benefits and many products (topical ointments, soaps, creams, etc.) are made from it, there are still restrictions. This is compounded by the fact that CBD is still illegal in many places.
Due to various restrictions and legal situations, most insurance companies will only provide insurance for ingestible and topical products falling within the legal limits of THC (0.3%). [4]
Thus if you produce any products with a THC content that is higher than this, you will most likely not be eligible for any insurance.
What CBD business insurance can you get?
We listed the available types of insurance that you can receive cover for if you own or run a CBD business. Let’s go over what they will include.
Take note that although these types of insurance may not deal strictly with your CBD product, you may not get coverage if the products you produce have a high THC content. Moreover, these insurance policies also apply to hemp-based products and businesses.
CBD Inland marine coverage
Inland marine coverage for CBD will cover material, equipment, or products that are able to move or are transportable. This will also include property coverage for essential equipment for communication or transportation. [5]
CBD Hired and non-owned auto coverage
CBD hired auto coverage includes claims based on situations involving you or your employees when driving, renting, borrowing, or leasing vehicles.
Non-hired refers to a policy involving you or your employees using personal transportation. This type of coverage is extra to any personal coverage that you or your employees may already have on your vehicle. [6]
CBD Employee benefits liability
This policy covers an employer’s liability for omissions or errors within the administration. This includes errors or omissions regarding an employee benefit program. [7]
CBD Product liability insurance
As a CBD business owner, this might be the coverage that you are specifically looking for. As we mentioned, this type of insurance protects against any claims that are for bodily harm, injury, or property damage due to your CBD products. [8]
Whether you sell, manufacture, or distribute CBD products, you will want this specific insurance. Without it, you could be liable for any harm that comes to someone using your CBD product.
This insurance policy should cover CBD products that are sold, manufactured, and distributed that lead to;
- Death
- Illness
- Injury
- Property damage
The important thing to remember here is that this type of insurance will cover topical CBD products and hemp products. These will include oil, gummies, creams, balms, lotions, soaps, etc.
Take note that your CBD products do have to meet the regulation standard of only having 0.3% THC levels. Otherwise, you will not be able to obtain this type of insurance.
Does this also cover ingestible CBD and hemp products?
Ingestible CBD products such as oils, gummies, and capsules usually come with a high risk of product liability. Moreover, if you are a CBD business owner, some of your products will most likely be ingestible, so this could be a big worry.
CBD ingestible insurance that is under the umbrella of product liability insurance will cover you if one of your ingestible CBD products are subject to;
- Allergic reactions
- Manufacturing defects
- Choking
- Mislabeling of products
- Damage to property [9}
What types of CBD businesses can get insurance?
Depending on your CBD business, you may be worried that it is not applicable to receive insurance. However, many companies will offer you insurance no matter the business within the supply chain for CBD (manufacturer, seller, or distributor). You can expect to get insurance if you are;
- Manufacturer and/or distributor
- Grower, extractor, and/or processor
- Retailer and/or wholesaler
Do I need different insurance for CBD and Hemp products?
Typically, insurance companies won’t have a problem providing coverage for hemp-based products. This is because hemp contains little to no THC.
Since most insurance companies will only offer cover for THC products containing 0.3%, the insurance policies will usually be the same. [10]
CBD medical insurance
You may be wondering if you can acquire insurance if you perhaps sell cannabis-based products or if your insurance company will pay for you as an individual to purchase these products.
Due to the vast regulations and laws regarding cannabis and cannabis-based products, that is a little beyond this article’s scope.
However, it is essential to understand that most insurance companies won’t cover any CBD, hemp, or Cannabis-based products that you purchase. This is because CBD is not FDA-approved.
At the moment, the only prescription drug containing CBD available that insurance companies in the USA cover is Epidiolex. [11]
Conclusion
We came to the conclusion that if you are a CBD business owner, you can, in fact, get CBD business insurance. This includes if you are a grower, distributor, manufacturer, processor, seller, etc.
For the most part, insurance companies will insure you as a CBD (and hemp) business owner if you meet regulations. This is that any hemp and CBD products must only contain 0.3% THC and no more.
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