When laws change, the insurance industry changes. The Canadian government’s plan to legalize marijuana in October of 2018 will alter the landscape of both commercial and home & auto insurance in dynamic fashion. While the ink is not yet dry on legalizing cannabis, here are some of the ways it will affect the insurance industry once it becomes a reality.
No More Denial Of Claim Payouts Due To Growing Cannabis Indoors
Currently, if a house fire is caused by a cannabis grow operation, the claim will be denied and the homeowner will be responsible for the total replacement value of their residence. This is because insurance does not cover claims resulting from illegal activity on the part of the policy holder. There was a case involving Gore Mutual where the Ontario Court of Appeal dismissed a homeowner’s property loss claim after their home was destroyed in an explosion caused by illegally growing cannabis indoors. With imminent changes to federal legislation on the horizon which will allow Canadians to grow four cannabis plants for personal use, the nature of insurance contracts will have to change to accommodate the new law. Moving forward, it is entirely likely that such an explosion claim would be paid out so long as the homeowner was not growing in excess of four plants.
Insurance Companies May Now Pay Clients Cash If Their Cannabis Is Lost Or Stolen
Insurance companies do not pay out claims for the loss, theft or damage of illegal items owned by the policy holder. As an illegal substance, cannabis has historically fallen under this category, with customers being denied financial compensation in the event of a claim. With the new legislation forthcoming, it is conceivable that a policy holder could register legal quantities of marijuana and potentially receive a cash payout if their cannabis was compromised by risks and hazards specified in the policy. Perhaps even more interesting, many insurance policies offer to replace items instead of providing financial restitution. We might see a day where insurance companies have to send clients marijuana!
Driving Under The Influence Of Marijuana Will Affect Your Insurance Rates
Similar to alcohol, driving under the influence of marijuana is a dangerous practice with many of the same intoxicating effects. Focusing becomes more difficult, eye sight is hampered and reaction time greatly diminished. Police officers have already begun conducting roadside drug testing which measures a driver’s intoxication levels. Once cannabis is legalized, driving while under the influence will have adverse legal and insurance repercussions that will see rates increased or policies cancelled.
Currently the Ontario government has suggested the following legal penalties for driving under the influence of cannabis:
- Young (under 21) or inexperienced drivers (G1, G2,M1, M2) must be completely sober
if driving. Failing that, punishments could include a 30-day license suspension and a fine between $250-$450
- Commercial drivers must also be 100% sober. Punishment includes a 30-day license suspension and a fine between $250-$450
- Any driver outside of this, who fails a roadside test will get a fine between $250-$450. If a sobriety test is refused, the fine increases to $550
With legal consequences already proposed at the provincial level, insurance consequences for impaired driving will likely be specified in short order to coincide with the changing laws.