Insurance Matters: How Retailers Can Protect Themselves from Liability for Recalled Products


<![CDATA[In the growing world of medical and adult-use cannabis, the need for safe products is inarguable. Exactly what those safety measures will be, however, is subject to a debate that can range from access to packaging, labeling, advertising and beyond. Two aspects of safety that are often overlooked, but just as important, are  product testing and insurance. The cannabis world has access to insurance policies that cover a variety of losses, including crop loss and personal injury. But in order to protect losses, cannabis-friendly insurance companies require applicants to test their product. Some carriers even ask for the testing facility the applicant uses, because the application becomes a part of the policy. In this way, a company can do more than simply say it is cannabis-friendly. The company can have the insurance and receipts to prove it. In the long run, cannabis companies that avoid insurance or product testing will only open themselves to potential losses later down the line.A $1-Million DifferenceIf the insured elects not to test its product after representing to its insurance carrier that it does, the carrier can deny or to exclude coverage. In its most benign form, lack of coverage arising from the insured’s failure to test its products means a mere waste of money paid on annual policy premiums. But in its worst manifestation, it could mean no coverage in the event of a serious casualty event. Consider the implication of having no coverage in the wake of a customer who suffers extreme medical issues or death from ingesting tainted product. Or worse still, imagine a cluster of injured customers that ingested a bad batch of product. Such a scenario is not merely possible, but inevitable. Product recalls, like the recent spate in the state of Arizona, are not uncommon in these early years…

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Source : Insurance Matters: How Retailers Can Protect Themselves from Liability for Recalled Products

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