CBD Hemp Insurance is Available


CBD Insurance: It’s Available, But It’s Scarce

If you own a CBD business in Texas, we offer one of the few policies available for product liability for companies who market cannabidiol (CBD) products.

Texas CBD InsuranceAre you one of the pioneer companies with a CBD business in Texas?  You will need product liability insurance to protect you and your customers.   We can help you with Texas CBD insurance and Texas CBD general liability insurance.

Liability insurance costs are often a challenge to many CBD companies.
Obstacles to CBD Liability Insurance
Today, CBD insurance is neither widely available nor inexpensive.
Why is that?

First, you need to consider the insurability of CBD from the insurance company’s perspective.

Traditionally, insurers have not offered insurance for activities that they perceive are illegal.  The thinking being this would be against public policy. Currently, the regulatory bodies that have authority over CBD are too numerous to mention, so the “legality” of CBD is still under a dark cloud, and this by itself scares many insurers.

A related issue is the direct-to-consumer sales of CBD products on the Internet. Their concern is that if a product is sold to a consumer in a state where there has been no favorable cannabis legislation enacted (e.g., medical, legal), and they insure it,  have they insured an illegal act?

Remember, these insurance companies are by-and-large public companies, and the last thing they want is a regulatory action against them for insuring illegal activities.

Availability of CBD Liability Insurance

The availability of liability insurance has actually shrunk the past few years.  There are only a handful who will insure CBD companies.  And they generally are not going to be “household name” insurers like Hartford, Travelers, Geico, Nationwide, State Farm or Farmers to do it.Austin Insurance Group deals with one carrier that is openly and actively underwriting CBD risks in Texas. The cost starts at about $6,500 for a $2 million liability policy. That’s usually the absolute minimum premium that smaller companies will pay. Larger companies can expect to pay more. NOTE: This is approximately twice what a startup dietary supplement company would pay for a similar policy.

CBD Insurance
Almost all companies that come to us for liability insurance have a few things in common: 1) they can’t find coverage, 2) they are short of cash, or 3) they waited until the last minute to investigate the cost of the insurance.
1) You have come to the right agency.
2) The premium can be financed althought you will pay some interest considering it’s a loan.

3) You may end up with sticker shock at the cost of the insurance.

The Minimum Premium Concept

The small handful of carriers offering liability insurance to CBD companies are called “excess and surplus lines” insurers. Which means you may not have heard of them, but  they are usually subsidiaries of larger insurance conglomerates.These conglomerates set up subsidiary companies to underwrite specialty lines, often that sell or make products that have a track record of injuring people and causing insurance claims. Actually, it is a blessing that these excess and surplus lines companies are allowed to exist, because without them,  industries like ladder manufacturers, snowboard or skateboard manufacturers, football helmets suppliers, dietary supplements, and CBD companies might not be able to get insurance at all.

These carriers have minimum premiums, which are defined as the absolute minimum cost a single policyholder will pay. The majority of these carriers have anywhere from a low-to-high five-figure minimum premium, which makes them unviable for a company projecting sales of about a million dollars or less.

So a startup or small company shouldn’t expect to have several insurers bidding on its account, as might occur if it were starting a restaurant or an ice cream shop. A startup will be stuck with the carriers that have the lowest minimum premium today.

But  “today”  is relative term. A few years ago, for a standard $2 million liability policy, the lowest minimum premium was about $10,000. Today, it is hovering around $3,000 to $6000, which is quite an improvement, but still a big bite for a company seeking to conserve cash.

Contact our office today for a free-no obligation quote for your Texas CBD Insurance.  We are one of the leading agencies in Texas who can offer you this coverage.

Mike Torabi
Austin Insurance Group since 1994

Mike Torabi is a personal and commercial insurance agent with Austin Insurance Group located in Austin, Texas.  He is the owner and agent with over 20 years of experience.  You can contact him by email; phone: 512-339-2901; Website: www.aigtexas.com.