Marijuana legalization raises issues for property insurers

Published: June 16, 2017

Updated: July 24, 2018

Author: Luke Jones



Canada’s adoption of marijuana legalization is imminent, but there are still potential legal issues. One of them is a possible problem with property insurance policies. Michael Teitelbaum, a partner with Hughes Amys LLP, offered the warning at ARC Group Canada’s 2017 annual seminar and cocktail event.

Titles Smoke Hazards: How will the legalization of marijuana affect the insurance industry?, Teitelbaum spoke about how court decisions will have an impact on the Canadian insurance industry after the legalization of marijuana.

One case involved TD Insurance. The Ontario Divisional Court upheld and appeal that ruled the plaintiffs should receive $1,000 each for marijuana that was stolen. The drug was being used for personal use. However, in a twist, the appeal judge awareded the claim for a different reason to the original ruling.

While the plants were personal property, they were not usual to ownership, even though the plaintiff insureds were authorized to grow marijuana for their own medical purposes because the court held that it seems quite evident that marijuana plants in the backyard are not usual to the ownership or maintenance of a dwelling itself,” Teitelbaum said during his presentation.

“Given that the proposed legislation contemplates home cultivation of cannabis, this is another provision that will require amendment,” he added.

This could lead to new property insurance methods. For example, an insurer could now ask customers whether marijuana will be on the premises when selling a home insurance policy. If they would end up paying out on a claim for marijuana, this could affect the price of the premium.

“There’s many questions, without many definitive answers at this stage,” Teitelbaum concluded. “Presumably as the federal legislation is firmed up and the provinces deal with the various administrative matters they are being called upon to address, the identity of the insurers who are prepared to write and the nature of the coverages that will be offered will be announced. It will be interesting to see whether provinces make insurance coverage for manufacturers or producers, distributors and retailers and dispensaries mandatory.”