A policyholder's demand of an insurance company to pay up for the loss of a personal stockpile of marijuana -- through fire, theft, water damage or some other cause -- would have been simply unthinkable a generation ago.
Not these days.
And certainly not in Colorado, known as America's vanguard state in legalizing recreational marijuana use and having a firm regulatory scheme in place for lawful manufacturers to cultivate and sell cannabis.
A recent Insurance Journal article discusses the fascinating subject of pot-related insurance claims and how they're being resolved in state and federal courts across the country.
As the writer of the Journal article notes, the subject matter is immediately complex because of the fact that, while a number of states have legalized both medicinal and recreational pot, many others haven't, and pot use, possession, cultivation and sale continues to be flatly taboo under federal law.
What happens if a claim is brought seeking coverage of a loss related to marijuana?
That is "an open question," states the Journal, because "policies typically do not mention or are ambiguous about marijuana."
Case outcomes are interesting, and shed some light on the subject.
In a Hawaii case, one national insurer was relieved of any coverage duty after the court ruled that legal medical marijuana plants stolen from a home needn't be compensated for because they are illegal under federal law.
Conversely, in a Colorado case decided by a state court last year, the court ruled in favor of a policyholder making a claim for harvested plants grown in a marijuana cultivation enterprise that were destroyed. The insurer argued that the plants were contraband under federal law, but the court rejected that argument, calling federal enforcement on marijuana "erratic." The court further rejected the argument that coverage must be denied as against public policy because, candidly, that is not the case in Colorado.
"Federal law is an insurer's best hope in such cases," states the Journal.
Whatever the subject matter or material facts of an insurance claim might be, the true best hope of an insurer tasked with defending against a claim undoubtedly resides in securing timely and aggressive legal counsel from a proven insurance defense attorney.
Seasoned legal counsel will proceed with an unwavering focus on obtaining the best possible result for an insurance client (including in cases where an insured party is defending against a third-party claim).