As U.S. marijuana laws change, the insurance industry is adapting on a state-by-state basis. Cannabis is legal in some form in 29 states and the District of Columbia, according to the National Conference of State Legislatures.
But it doesn’t matter if you use marijuana for recreation or medicine, the production, possession or use of this Schedule I substance is still against federal law. This head-scratching conflict is sure to bring quandaries for insurers and confusion for policyholders wading through muddy legal waters.
To help clear up the confusion, here are six ways marijuana use affects different types of insurance.
Auto insurance. Getting caught driving while high is no different than driving while under the influence of alcohol – there’s no separate law or violation for it. Even though there isn’t an equivalent breathalyzer test for cannabis, you could be charged with a DUI and see a huge spike in your auto insurance rate or get dropped altogether.
Home insurance. If you own marijuana and it’s stolen or gets damaged from fire or water in your home, are you covered? The answer isn’t simple. Some home insurers protect you from marijuana loss in states where it’s legal for both medical and recreational use. It may be viewed just like any other belonging, with coverage up to your policy limit for certain perils, such as fire, theft and windstorms.
Even pot plants that you grow can be covered – if you have a state license and don’t exceed legal limits. However, how much you can claim for missing or damaged marijuana is unclear and could require a negotiation with your insurer.
In states with low possession limits (like a couple of ounces) insurers are less likely to push back and fight marijuana-related claims that could be less than $1,000.
Renters insurance. If you own marijuana and have renters insurance, you’ll get protection similar to home insurance. As long as it’s legal, you may be covered for policy perils up to your limits for personal belongings.
Health insurance. If you use marijuana for medicinal purposes and want to claim the cost on your health insurance or buy it using your health savings account, or HSA, you’re out of luck. Because, as previously mentioned, cannabis is a Schedule I drug and hasn’t been approved by the U.S. Food and Drug Administration, health insurers don’t reimburse users.
Life insurance. Smoking cigarettes is a major red flag for life insurers who know it causes one in five deaths in the United States per year, according to the U.S. Centers for Disease Control and Prevention. An insuranceQuotes study found that smokers can pay as much as three times the amount nonsmokers pay for term life.
But some insurers treat marijuana differently and may not consider users as risky as tobacco users. Since life insurance rates are largely based on your age and health status, the underlying medical reasons (such as for symptoms of multiple sclerosis or cancer) for why you use cannabis in the first place are what insurers may give the most weight.
However, some life insurance carriers may treat marijuana smoking on par with cigarette use. So how it affects your rate depends on the company and how frequently you smoke pot.
Business insurance. If you run a legal business in the marijuana industry, insurance for liability or workers’ compensation may be difficult to get, or come with a high premium, because the industry is so new. Carriers don’t have much claims history to draw from in order to fully understand their exposure to risk.
However, once carriers have more data and confidence in the legal ramifications of defending marijuana business policies, more companies are likely to enter the market and offer competitive rates.
If you use marijuana or work in the business legally, make sure your insurance agent or company knows, so they can help protect you. If you don’t disclose your situation or have the right coverage, you might have an unexpected premium hike or loss.