If you have just started a new cannabis company and are focused on creating and distributing your product, the last thing you want is to create a product that might hurt your consumers. However, to protect your business from potential liability, it still makes sense to purchase cannabis general liability insurance.

Product Liability

When you distribute cannabis products, you are liable for any harm you might create through your products. For example, if a plaintiff was harmed after they were made sick by a particular pesticide used on the cannabis plant, they might have an insurance claim.

How an Insurance Claim Works

When you are insured, a customer will file a claim with your insurance provider if they become injured by one of your products. The insurance provider will discuss the claim with your customer and will then will try to determine if the claim is valid.

They will also discuss the claim with you as part of the investigation. If the insurance provider determines that you were at fault for the damages suffered by the other party, they will cover them by settling with the claimant. They will cover all costs, such as legal and medical, so your company does not suffer financial loss.

Companies That Specialize in Cannabis Liability

Cannabis businesses are unique, and you must find an insurance company specializing in helping you overcome your unique challenges. Growing, extracting, dispensing, and baking cannabis products have unique risks. 

Why You Need Liability Insurance

One of the accusations you might face is that a cannabis product you sell is mislabeled or misrepresented. The customer might then argue that your product harmed them.

If a customer suffers damage in any way, you must compensate them. For example, if a customer becomes ill because of your product, they might be entitled to compensation for medical expenses, pain, and suffering. Without insurance, you would be forced to pay for these expenses yourself if the customer chooses to take you to court. Then, you will be forced into an expensive and time-consuming legal battle.

When Liability Insurance Is Required

Obtaining insurance may also be necessary to secure other services. For instance, if you will need a bank, you may be required to obtain insurance so you can qualify. In some states, you must obtain insurance so that you will be able to operate legally. Therefore, securing liability insurance before you begin operating your business is important. 

For more information about cannabis general liability insurance, contact a local company.