Cannabis businesses don’t have many options when it comes to insurance, because major insurance players are staying out of the market until cannabis is reclassified under federal law. However, cannabis licensees are required to carry insurance by state law (discussed below), and often by landlords, lenders, customers or suppliers. Recent vaping-related bodily injuries have also highlighted both the need for products-liability coverage and the fact that most cannabis-liability policies contain significant exclusions – and below we provide a few ways to deal with these exclusions. Finally, we discuss some hope on the horizon in the form of increasing standardization of forms and federal crop insurance.
State Laws. These state-law requirements are not trivial: a licensee that fails to carry the proper coverage could lose its license. Continue Reading
The Washington Supreme Court recently issued a decision strongly reiterating the “made whole” doctrine under Washington law, which provides that an insurer cannot exercise its right of reimbursement from a third party who injured its insured, until the insured itself has been made whole by recovery of damages or losses it has incurred. In Daniels v. State Farm Mut. Auto Ins. Co., State Farm paid for damage to its insured’s vehicle in full, less a $500 deductible. State Farm then recovered 70% of the damage from GEICO, which had insured one of the parties whose negligence had caused the loss. (Another party was determined to be 30% at fault; all parties stipulated that Daniels—State Farm’s insured—had no fault). State Farm then reimbursed its insured 70% of the $500 deductible. 
Insurance policies are famously obscure, full of non-sequiturs and jargon. Coverage disputes often feature disagreements about the meaning of policy wording. As a result, courts have developed a process for interpreting policies. In Oregon, the interpretation process (the Hoffman analysis, named for an important case) isn’t the same as for an ordinary contract. It focuses first on the plain meaning of a disputed term, then the immediate context of the disputed term, then the context of the term in the policy as a whole. Overlaid on that are the concepts of the “ordinary purchaser of insurance” among others. If a phrase is deemed ambiguous even after that analysis, the policyholder’s interpretation will prevail. 
The cyber-insurance world is discussing the ins-and-outs of litigation going on between food manufacturing giant Mondelez International and Zurich over coverage for the ten billion dollar NotPetya cyber attack that crippled several multi-national companies. Zurich has 
Stormwater overflows and similar accidents are a frequent source of damage in Oregon and the Pacific Northwest generally. Insurers often deny coverage for resulting damage under the “surface and flood” waters exclusion. A recent case out of the U.S. District Court of Oregon held that surface and flood water insurance exclusions do not apply to man-made sources. In Veloz v. Foremost Ins. Co. Grand Rapids, Mich. (2018), the court held that surface and flood water exclusions apply to waters from natural—not man-made—sources. Veloz also implied that if the insurer wants to exclude water damage from a burst water main, the insurance policy must specifically state that man-caused waters are excluded.
In a competitive industry trade secrets can be incredibly valuable. As a result, when trade secrets are stolen, litigation is common. Customer information, supply-chain strategies, marketing plans: all of these have been the subject of lawsuits, typically driven by a high-level executive leaving one company and joining another. Will insurance cover these kinds of trade secrets claims? Maybe—and as a result, every business faced with a trade secrets claim should examine their policies to see whether they could be entitled to at least coverage for their defense costs. 
