Canadian Underwriter

How cannabis legalization could re-word home insurance policies

August 29, 2018   by Greg Meckbach

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If carriers do what one insurance defence lawyer advises, your clients could get new exclusionary language in their home insurance policies as a result of cannabis legalization.

Insurers who are concerned about the risk of fire and burglary arising from cannabis grow-ops may be adding marijuana-related exclusions when renewing homeowners’ policies.

So now Canadian home insurers should be looking “very carefully” at the wording of their exclusion clauses for illicit drugs, said Mouna Hanna, a Toronto-based insurance defence lawyer with Dolden Wallace Folick LLP, at the Canadian Claims Summit. The Canadian Claims Summit was hosted by the Canadian Independent Adjusters’ Association in Toronto.

Some home insurance policies have exclusions specifically for losses arising from growing marijuana. Other home insurers do not exclude marijuana specifically but do exclude losses arising from drugs which are listed as illegal in the federal Controlled Drugs and Substances Act, Hanna suggested Tuesday.

This will be significant starting Oct. 17 because marijuana will no longer be illegal for recreational use.

Among the changes with the Cannabis Act – passed into law this past June – is that people will now be allowed to grow up to four plants per household.

Home insurers have been concerned for years about consumers who grow marijuana at home because of several property risks.

“Fires are 24% more likely to occur in a home or dwelling containing a grow-op,” due in part to “high-intensity” lighting needed to grow the plants, Hanna noted.

“There is also the increased risk of burglary, vandalism, water damage, mold and the list goes on.”

One example of a marijuana exclusion in a home insurance policy can be found in Pietrangelo v. Gore Mutual Insurance Company, a coverage dispute that reached the Court of Appeal for Ontario in 2011. In 2003, Gore Mutual added in an exclusion, on its home insurance policies, for dwellings “used in whole or in part for the cultivation, harvesting, processing, manufacture, distribution or sale of marijuana or any product derived from or containing marijuana or any other substance falling within Schedule (Section 2) of the Controlled Drugs and Substances Act Narcotic Control Regulations,” Justice Edward Ducharme of the Ontario Superior Court of Justice wrote in Pietrangelo.

Pietrangelo involved a coverage dispute after a tenant caused a fire while making hash oil at home. The landlords filed a claim with Gore Mutual. Among other things, the claimants argued the exclusion was unreasonable, they did not receive letters from Gore Mutual notifying them of the new exclusion and the exclusion was ambiguous. Judges disagreed. The Ontario Superior Court of Justice ruled in favour of Gore Mutual in 2010. The claimants were unsuccessful on appeal.

The Court of Appeal for Ontario “did not hesitate to find that the wording was valid and applicable,” Hanna said Tuesday at the Claims Summit. “It’s simple language. It addresses marijuana.”

Insurers face some risks from homeowner policies remaining in force after Oct. 17 – if  occupants of those homes are growing cannabis.

This is because if an insurance policy excludes illegal drugs but not marijuana specifically, “if there is a loss related to a grow up between October 17 and the policy renewal date, you are stuck in this grey period,” Hanna said. “You can’t do anything about the policy that is existing.”

The impact of legal grow-ops on insurers is still open to question.

“Is it a big risk? Maybe, with the increase in the number of new growers,” Hanna said. “But on the other hand, is there going to be an increase in new growers now that they are allowed to? I don’t know.”

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2 Comments » for How cannabis legalization could re-word home insurance policies
  1. Karl says:

    It would be nice if insurers actually did research perhaps to differentiate between a grow-op, which is and still will be illegal, and a personal, legal growing of 4 plants. Legally growing 4 plants indoors, properly creates zero enviorimental variables into the household, and the hydro use would be no more than a common window ac unit. LED is affordable, and quite safe. It’s really quite simple, and I struggle to understand why these questions aren’t actually being addressed or even asked? Calling everyone who wants to grow cannabis after Oct.17 a “grow-op” is simply fearmongering, and false.

  2. Guy says:

    Great information Karl, I could not agree with your more, fear mongering has become a staple in our society, and sadly the ignorant tend to believe what they read and or hear.

    Quote in previous post, “Pietrangelo involved a coverage dispute after a tenant caused a fire while making hash oil at home. “You have a couple incidents that involves any sort of cannabis and it is dragged through the media for months, or even years, “part of the plan”, but if many houses burn because of toasters, you might get a flash of it and it fades away!
    Toasters that burn down many houses are not classified as high risk, cigarettes that burn down houses are not considered as high risk, but 2 incidents with cannabis is now labelled extremely high risk and is fast becoming a a gravy train for insurance companies!

    The systems that control the masses are a complete mess, and I can’t see that changing anytime soon, we the tax payers have absolutely no say in the matter “we are led to believe that we have a voice” but really!

    Buy cannabis from any business and or organization that “to be blunt” generate $$$$ to feed, for lack of better terms, “organized crime” our government, is all good and not considered illegal grow-op’s because of the controls in place to generate $$$$$.
    It’s sad that a medical cannabis users that grow for personal use, is still simply labelled and is considered as running an illegal grow-op, due to the simple fact that $$$ is not being generated, and this labeling is simply put in place to protect the system and it’s laws that are put in place to generate dollars.
    The system does not believe that enabling the user “patient” to grow good clean medication at an affordable price which has not been contaminated with pesticides and such, is a good thing, simply due to the fact that it is not being monetized!
    It’s sad how tax payers are being manipulated. If you go out and buy adulterated THC pills from your local pharmacist it is called medication, “I could go on about this crap for hrs., but that’s for another post”, but go out and buy good clean organic cannabis with no pesticides down the road and it comes a from illegal activity and is considered being bought from a grow-up and from a drug dealer, again; all due to the fact that taxes are not being generated, and all of this simply because the seller has no means of being let into the system to generate $$$$!
    I myself grow for medical purposes, “all legal with documentation” I tried to follow the system and do it all the legal way, and it bit me in the butt, I disclosed to my insurance company that I had a legal, I guess since we’ve all been labelled by our controllers “grow-op” and the insurers dropped my policy like a hot potato the very same day.
    After months of digging hard in order to find an insurer, I finally found an insurance company that DID insure me for about 1 year with a price tag of about $3500 per year for my home, “which was a high price but I had no choice”, and now recently, when my policy came up somehow they promptly dropped me, then came back with a ballooned of $6490 per year, for the exact same policy that I was on the previous year, and note; all this came about a few days after this being labelled legalized, this new price I refused, as this price is ludicrous, it’s gouging, so now I sit without any home insurance I am penalized due to not conforming to the norm in society “for lack of better terms”!

    The systems that is put in place to control us all, is in the business of creating criminals, that is how this all works, and that is what protects their bottom end. All of this for the greater good, “only hypocrites believe that statement” This is not about us the people, we are just numbers in this messed up system we helped generate, and are now stuck in.
    It is imminent that down the road our controllers will figure out how to incur more revenue by finding a way to monetize personal GROW-OPS. I believe that this is in the works, simply due to the issues that we are currently having, insurers have already started the process of cashing in even more, on our as*es…

    I wish I could be here 50 years from now looking back at the sad political state our country was in!! You might call it a government but I struggle to use that word.
    Many people struggle to understand why “the proper questions aren’t actually being asked or addressed!” I believe that this is a long way from happening as this whole picture is all about $$$$, this is NOT about you and NOT about me, as you and I are both just individual numbers in this sick game with no simple answer to rectify the corruption that is rampant in our political system…………….
    Typical with these sort of posts, people will quickly dive in and go after the writer and pick him apart, instead of focusing on the content of the article, this is not about you and I, it is about all of us, don’t shoot the messenger, as many of us think the same, but publicly speaking is where most fail as they know they will become a target!

    Sorry for venting

    PS: If you know of a good insurance company that does not gouge its clients and will simply insure people who grow on their own, please PLEASE, send me a reply or message so I can get my issues rectified, and also help the masses with the same issues that we are all having…
    Keep voting, if you think it matters! ;(


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