Growing concern: P.E.I. insurance company cautious about covering cannabis

An P.E.I. insurance company has informed its policyholders that it won't be covering any buildings where cannabis is grown unless the company can verify it is being done safely. 

P.E.I. Mutual Insurance Company notified its customers of the policy in late February via mailed letters. The company said since cannabis legalization it has experienced increased risk associated with cannabis being grown in both residential and commercial buildings. 

"I want to be clear we're not discriminating, we're not concerned about use, we're not judging that at all — where we're concerned mostly about the safety aspect," said Blair Campbell, the company's general manager.

Since cannabis was legalized, the federal Cannabis Act allows up to four plants to be grown per residence for personal use.

"Coverage for buildings and their contents is excluded under P.E.I. Mutual policies where cannabis is cultivated, harvested, processed, manufactured, distributed or sold," the letter reads. 

If people do want to grow in their buildings and be insured by P.E.I. Mutual, they have to let the company know.

The company said it will then send out an underwriter to verify the plants are grown in a way that is safe. If customers don't let P.E.I. Mutual know about the cannabis plants and the insurance company finds out, their coverage will be void. 

'Lives are at risk'

The company said it is primarily concerned about fire risks because of the heating and electrical components of growing, as well as excess moisture involved which could cause mould or water damage. 

"With the electrical systems, they need to be properly set up by an electrician. If you're introducing heating systems they need to have a CSA or similar approval. And they need to be put to their proper use and not improperly modified," Campbell said. 

He said it's not just about property loss and a dollar figure for the company.

"People can sometimes lose sight of the fact that, you know, they're introducing heating and and electrical systems that create these fire risks and lives are at risk," he said. 

'Depends on how they're growing it'

Jeff Cooke, president of Cooke Insurance Group in P.E.I., says companies have the right to decide what to insure. Those decisions can be guided by risk, but can also be guided by the company's principles, he said.

"I've seen insurance companies on the commercial side say: 'No we won't do it. It just goes against our core beliefs.'" 

While none of the companies Cooke works with are taking a similar stance on cannabis, he understands why some might. 

"It's a little bit unknown yet you know, and I guess it depends on how they're growing it. You know, what type of heat lamps. Some may have it set up right, some people may use ad hoc systems. So I guess certain companies may not feel completely comfortable in that process," Cooke said. 

I don't really seeing it being a big issue.— Jeff Cooke

Cooke said it's the special growing conditions that cannabis requires that set it apart from other plants that people might grown in their homes. 

"Tomato plants normally just grow with natural sunlight, you know, you normally can hang a vine in the window or your little greenhouse and it's going to grow," he said.

Cooke said he thinks fear of unknown present and future risks may make insurance companies shy away from cannabis.

But he said he thinks more companies will eventually become used to insuring cannabis operations. 

"If you do things right, follow things right, I don't really seeing it being a big issue," he said. 

Real estate concerns

Since legalization, some realtors say they've been coming across cannabis plants being grown in houses less often. But they still look for certain red flags. 

"The things that we try to look for would simply be, does the air feel heavy?" said Mary Jane Webster, broker and owner of Remax Charlottetown. 

"Mould sometimes, when not treated or taken care of, you can get a funny smell, so just a little kind of tidbits that we try to look for based on our past training."

But Webster said most times realtors see plants that appear to be growing properly. 

"If it looks good to us, then it's fine," she said. 

Webster said before legalization, if cannabis was found growing in a property it would have been considered a stigmatized property and have to be disclosed to the buyer. She said agents are still disclosing it to would-be buyers just so they're aware. 

"Some people you know just haven't been exposed to it or haven't experienced seeing anything, so we just want to make sure that we don't come around a corner and see a greenhouse and all of a sudden, you know, a bit of shock value," Webster said.

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