Does Phoenix, AZ Renters Insurance cover medical marijuana? Since there are a wide variety of scenarios that could result in a loss, let’s look at a few individually. You might find that in many cases we revert to a similar answer, and that’s because – as of today – that’s just the way it is. Many of the things that affect this are in flux, and may change in the future, but when dealing with insurance, you don’t want to hang your hat on a maybe.
The standard HO-4 policy includes language that payment will not be made for losses “[a]rising out of the use, sale, manufacture, delivery, transfer, or possession by any person of a Controlled Substance(s) as defined by [the FDA…] include but are not limited to… marijuana and all narcotic drugs. However, this exclusion does not apply to the legitimate use of prescription drugs by a person following the orders of a licensed physician.”
This sounds contradictory, doesn’t it?
It’s actually not contradictory in the least. The words “prescription drugs” are what this is likely to hinge on. While in Arizona you need orders of a licensed physician to get medical marijuana, “prescription drugs” has a very specific meaning in state and federal law. It refers to substances which are approved for sale by the FDA for specific indications, and sold through pharmacies. Marijuana – medical or otherwise – does not, at this time, qualify under that definition.
On the other hand, if your card or other credentials were destroyed as a result of a covered loss, you may have coverage to replace that document, because at its core it’s nothing but an identification document issued by the state. We are unaware of any precedent on this at this time, however.
Whether you’re a caregiver or a patient, you’re not going to have coverage for theft of the medicine, because it’s federally illegal. That’s going to be the real crux of this matter – marijuana is still federally illegal, and therefore will not generally be covered by renters insurance in Phoenix, or anywhere else. But why is that if your agent is in Phoenix and your insurance company has a presence in Arizona?
Your insurance company operates in interstate commerce. Many agents even operate in interstate commerce, working in AZ and CA, for example. That means that their actions are governed by federal law. Because of that, they have to work within the bounds of that law and consider even legitimately acquired medical marijuana to be an illegal substance which is not eligible for coverage.
Your plants would not be replaced if there was a theft or a fire that destroyed them, for the same reason. It’s necessary to determine the cost to replace a lost plant or tree with one of like kind and quality, and the insurance company would be exposing themselves to problems if they were to pay for you to buy another plant of that kind. In addition, it would be somewhat difficult to determine the fair replacement cost of a plant which is technically illegal. Arborists can determine the cost to replace a destroyed tree, but the marijuana industry is still evolving and the same level of expertise in appraisal is not generally available.
If you cause a fire because the lights you’re using to grow with are poorly wired, that’s not likely to be covered under liability coverage on your Phoenix renters insurance because you technically caused the loss while committing a crime. We remember one particular case in which a landlord’s policy denied coverage for cleanup of a home that was used as a meth house by the tenants, because the cause of the loss was criminal activity. While there is an obvious difference between growing a few marijuana plants and running a meth operation, and a significantly elevated level of risk in the latter, the same general principles are likely to apply.
While this may be disappointing, it’s not your insurance company’s fault. Generally speaking, insurance companies hate to exclude specific classes of property or specific actions – it creates opportunities for misunderstandings and lack of clarity. Insurance companies hate even more when there is a conflict of laws which causes them to exclude coverage for something like medical marijuana, and they’re forced to rely on the law rather than the policy document.
There are a few insurance companies which have delved into the business of insuring dispensaries and related business operations, but those are commercial carriers and generally address issues such as workers comp, general liability, products liability, theft from the business, business interruption, and the like. If the federal situation continues to languish in its current state, it’s possible some of those companies may expand into personal lines policies, but none of them appear to have any serious plans to do so at this time.
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