Higher and Higher – how cannabis legalization 2.0 could raise your insurance premiums

Cannabis legalization 2.0 is coming… but don't spend all your money on cannabis edibles. You might need some of it for your insurance.

 

As Canada approaches cannabis legalization 2.0—which will see cannabis edibles, extracts and concentrates become legal for sale—some insurance companies have begun saying that they may have to raise premiums on regular cannabis users.

While there have always been increased rates for cigarette smokers due to the health impacts of smoking nicotine and tobacco, marijuana has historically been a grey area.

To determine someones interest rate, policymakers will typically look through statistics and calculations about the activities one takes and the risks involved with them. They'll look at your age, your health, what car you drive, whether or not you've had any accidents, your criminal record and a host of other aspects of your life. Then, depending on how likely you are to use their insurance, they'll determine how much you pay.

While rates may vary from company to company, certain traits or activities will always raise your premium. If you've got a serious medical condition which requires frequent hospital visits—or if you work in a high-risk job—your premium will always be greater.

Cannabis, however, presents a unique case for insurance companies. While there have famously been zero recorded deaths as a direct result of cannabis use, there are also many underlying medical conditions which may lead one to use cannabis. If you use cannabis for your depression, anxiety or epilepsy, this will impact your premium.

Lorne Marr, director of new business development at LSM Insurance confirmed this, stating that "if someone is smoking or using marijuana and they have certain depression-related issues, or other anxiety or mental nervous disorders, that may not fly."

"Marijuana in combination with those other issues may result in higher premiums. Also, if someone were to get any type of impaired driving charge using marijuana, that may also impact things," Marr said.

But that's mostly because of the condition, and not the marijuana use itself.

When it comes to regular, recreational cannabis use, some companies have taken the tact of simply treating marijuana users like smokers, which can run them a premium 2-3 times higher than non-smokers.

It wasn't until cannabis legalization started becoming a mainstream subject that larger insurance companies began easing their stance on cannabis smokers. Though it's not like they had much choice, as surveys have revealed that 18 percent of Canadians (around 5.3 million people) reported using cannabis in the last three months, as of May 2019.

For insurers to continue making money, they had to accommodate the growing cannabis market. Now, as the dawn of cannabis legalization 2.0 is just around the corner, insurers are once again having to rethink their policies.

It's likely that the upcoming legalisation of edibles will draw in an entirely new crowd to cannabis. For all who don't wish to smoke as their primary method of ingestion, edibles will be their answer.

Though as exciting as the upcoming legalization 2.0 will be, users should remeber not to bite off more than they can chew—as you may end up paying for it. Lorne Marr has stated that size of the premiums will depend on the quantity of marijuana ingested by users.

"Quantity of use is always a variable; some companies will allow up to four joints a week, but most companies are two joints a week or the equivalent in edibles," said Marr.

"So that's generally considered a non-smoker, but it depends on other factors too."

A spokeswoman from Desjardins Insurance confirmed Marr's statements, mentioning that users may even be denied insurance coverage if their cannabis consumption is too high.

"Depending on the level of consumption, we could decline coverage or rate accordingly as we do for alcohol consumption, for example."

 

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Canada Protection Plan similarly analyses quantity of consumption to determine premiums. The company has stated that if users consume cannabis—in any form—above four times a week, they will be ineligible for certain plans.

Although this new quantity-based method of determining premiums is a work in progress— described by insurance provider Manulife Financial Corp as an "evolving issue"—there are  also questions of what exactly these companies define as "consumption."

Is eating a THC-laden brownie the same as smoking a joint? What about a small brownie versus a large one? And how do differing levels of CBD and THC come into play?

At this point, the nuances of the policies remain unclear.

For those wondering how insurers will know how much cannabis you're consuming, you don't have to worry about a drug test. Rather than swab you for THC levels each month, insurers will be asking a series of cannabis related questions on application forms to determine your premium.

As tempting as it may be to…alter the truth… about your usage when answering these questions, insurance lawyers are saying it's not worth it.

David Share, a lawyer with a focus on insurance claims came out stated that "disclosure is very, very important on these applications".

"Insurance companies will look under every rock to find some way to not pay. If there is undisclosed pot usage that shows up in a doctor's notes or medical history, that could void the insurance," Share said.

Put simply, if you lie, and end up needing that insurance, then chances are you won't get it.

Share mentions that for those who can't afford the higher cannabis premiums, they may have to consider lowering their consumption.

Though lowering cannabis consumption isn't something Canada seems to be very familiar with, as usage has surged in the past decade.

And, as we covered in our cannabis concentrates article, people are slowly beginning to edge away from smoking the plant and are moving towards alternative methods of ingestion, with edible sales in the U.S. and Canada set to reach $4.1 billion by 2022.

This means that Canada's legalization 2.0 is not only going to be huge, but also groundbreaking. Unfortunately, there's always going to unexpected bumps in the road with anything this new, so keep your wits about you and don't eat more than your insurance can cover!

For all other information, watch this space as this entire month is Edibles, Extracts and Concentrates Month here at the Green Fund!

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Louis O'Neill
Louis O'Neill

Louis is a writer based in Sydney with a focus on social and political issues. Having interviewed local politicians and entrepreneurs, Louis now focuses on cannabis culture, legislation & reform.

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