Filed with the California Department of Insurance, the first admitted cannabis insurance carrier Golden Bear Insurance Co is using a per plant valuation to calculate how much will be paid should a claim occur. For example, a fire burns 200 cannabis plants considered "Flowering Plants," then $150 per plant or $30,000 would be paid for this type of claim according to the policy forms filed with the Department of Insurance. A mother plant will pay $800 per plant if you have a covered loss.
This is a unique approach we have not seen before with other cannabis crop insurance carriers. Keep in mind, there have been only two carriers offering this type of coverage. Historically, other crop insurance policies would base the settlement on either a replacement cost or actual cash value depending on the carrier. Determining the right value using replacement cost or actual cash value is tricky due to factors such as market conditions, genetics, and demand for certain strains of cannabis.
Many insured's who decide to purchase this type of policy could take the position the market for a cannabis plant that produces a pound of product would be worth potentially $2,000 based on the market conditions at the time of loss. But, a harvested plant according to the Golden Bear per plant value may only result in $250 per plant.
Golden Bear has taken the ambiguity out of the claims handling process with a specific plant valuation leaving insured's no longer in the dark or necessitating a legal battle with how much will the insurance carrier pay. Theft will be the most likely "cause of loss" or reason a claim is filed, in our opinion. The good news continues to be more options for the cannabis industry particularly from an admitted carrier.
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