Commercial insurers must consider marijuana plant value for claims

Published: November 10, 2018

Updated: November 9, 2018

Author: Luke Jones



Marijuana legalization in Canada has created a new insurance dynamic, with insurers and brokers learning as the market adjusts. For example, claims adjusters must now consider the value of cannabis plants during the growth process to assess loss.

Stephen Agnew, vice president of specialty risk for ClaimsPro, told Canadian Underwriter the losses from properties with cannabis growth is much larger than without. In fact, a marijuana growing greenhouse in a business could be valued in the millions.

The Cannabis Act came into effect on Oct. 17, allowing the marijuana market to come out from under a legal shroud. Now regulated and legal, companies that grow Cannabis can expand into major organizations that grow, cultivate, and package pot.

As companies increase in size, the commercial risks for insurance companies will move in tandem. Talking specifically about greenhouse damage or loss, Agnew points out insurance companies must monitor the value a plant through stages of its growth.

“Is it a seedling, is it worth nothing?” Agnew asked. “There’s no money into the plant. What are the grow cycles, and at what stage of the growth cycle has the loss occurred in any one area of the greenhouse? That drives the value of the actual loss of the product.”

At the seedling stage, the cost of development is high: “If the product’s going out the door, you’ve incurred all of those expenses,” Agnew explained. “Your expenses to the product are much greater at the end of the cycle than they are at the start.”


While assessing how much claims from recreational is tough, medical marijuana provides examples of the range insurers can expect to be dealing with. Cannabis growth and use for medical purposes has been legal in Canada since 1999. Agnew says ClaimsPro has seen losses ranging between $150,000 and $750,000 in medical marijuana claims.