The impact of legal cannabis on home and auto insurance

While October 17th is out of the way and legal cannabis is finally here, there are still plenty of questions leaving Canadians concerned. While you may understand the rules on legal limits and where do buy it, have you put any thought into how it may affect your insurance rates?

Home Insurance

You might not think that the legalization of cannabis would affect your home insurance, even less so if you aren’t a user yourself. However, the new open guidelines around cannabis use, and particularly growing for personal use, means that there is an increased risk for insurers. Both fire and burglary become concerns when it comes to growing cannabis for personal consumption.

Canadian insurers have been working for the last few months to choose the proper wording on their policies. They have begun to add exclusions specifically for losses associated with growing cannabis.

Canada's new law states that people will now be allowed to grow up to four plants per household, which only caused some anxiety for insurers. Fires are 24% more likely to occur in a home containing a grow-operation.  

Alongside this, there is an additional risk of burglary, vandalism, water damage and mold. Next, the nature of the plant itself is tricky for insurers to classify. Is a cannabis plant (for personal use) considered personal property, or does it fall under the “tree, shrub and plant” portion of the policy?

There is an additional risk posed during the consumption of marijuana: smoking inside the home. If your home is damaged as a result of smoking inside, the same rules would apply as if you were smoking cigarettes. Smoking is seen as a risk for insurers and therefore the higher the risk the higher the premium. However, some insurers do offer a “non-smoker discount”.

The best way to determine what your insurance policy covers is to speak directly with your provider. If you don’t feel you have enough coverage to support your personal possessions then you can add an additional rider. And if you do plan to begin growing your own cannabis it is vital that you are honest with your provider from the get-go.

Auto Insurance

The federal government has made is clear that strict laws and punishments will be in place for drivers caught with THC, the psychoactive ingredient in cannabis, in their system. But with a recent survey revealing that 14% of cannabis users have admitted to being behind the wheel less than two hours after consuming the drug in recent months, there are still clear reasons to be concerned about road safety.

It’s no surprise then that alarm bells are going off for insurers with regards to the rising risk cannabis poses. While currently insurers are saying that it is ‘unlikely’ being a cannabis user will automatically increase your car insurance premium, Canadians are looking to certain parts of the US, where the drug has been legalized for a while, for help.

It seems some of the US states where use is legal are seeing insurance repercussions. In Colorado, where recreational pot use has been legal since 2012, auto insurance premiums rose at the third-fastest rate out of any state in the country. Whether this will be the case for Canada remains uncertain.

One time your premium will be affected dramatically, however, is if you are caught driving under the influence. Not only will you face the legal punishments in place, including fines ranging from $1,000 and higher depending on your THC levels, your insurer will also be notified.

It is most likely that they will drop you from their coverage, and it will be hard to find another auto insurance provider willing to take you on again. Similarly, your insurer will not provide any assistance in paying the costs incurred by damage to your car as a result of an accident where cannabis consumption was involved. ​

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