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Marijuana legalization raises concerns for insurance

The impending legalization of marijuana in Canada raises a number of legal issues related to property insurance policies, liability coverage and auto insurance. The referenced article below is used as a source to discuss how such insurance policies are affected throughout this post.

The Ontario Court of Appeal upheld a decision in a case that dismissed the insured’s property loss claim under homeowner’s policy. The insured’s home was totally destroyed by an explosion arising from the illegal production of marijuana on the premises by a tenant.

The court found that the exclusion for indirect or direct loss or damage to dwellings used in processing or manufacturing of marijuana applied. Insurers may decide to continue to avoid coverage for illegal mass production of marijuana by individuals, while recognizing that the limited production that will be allowed under the proposed Cannabis Act is lawful.

Regarding liability coverage, it remains to be determined how preliminary underwriting considerations addressed by the application process will be determined, along with how that coverage will apply and any limitations in terms of limits, deductibles or aggregates.

In relation to auto insurance, there could be an increase in impairment cases. Noting that impairment is not as straightforward as alcohol and no test comparable to the breathalyser is currently available.

With the legalization of marijuana around the corner, the Canadian insurance industry will have to adjust to its presence. We will continue to keep you updated with developments, but in the meantime contact your broker or company agent with any questions or concerns.

Source: http://www.canadianunderwriter.ca/insurance/marijuana-legalization-raises-legal-issues-related-property-policies-liability-coverage-auto-insurance-arc-group-canada-event-hears-1004114705/