Cannabis Transportation: Business Auto Insurance Vs. Non-Owned and Hired Auto Insurance

Cannabis transportation is now becoming a key element in the thriving cannabis industry. Cannabis businesses, from cultivators to retailers need to bring products safely from point A to point B, but there are significant risks related to transportation.

Being prepared and properly insured can help save you from major losses in case of an incident, while transporting your cannabis products.

Choosing the Right Auto Insurance

Depending on your business model, there are two main options of auto insurance that you can choose from. Which one you get depends on who owns the vehicle. If your business owns the vehicles that are being used for deliveries and transportation, you will need a business auto insurance policy that can cover whomever drives the company vehicle for use in company business.

If you opt to have drivers use their own cars, you will need to get hired and non-owned auto insurance.

Business Auto Insurance

Normally a Business Auto Insurance policy can provide these coverages:

1. Bodily Injury Liability – this pays the cost of bodily injury to others from accidents that you are held responsible for. In the case that you are sued, it also covers payments for your defense and court costs.
2. Collision – pays for a covered vehicle that is damaged by a collision with another vehicle or object.
3. Comprehensive – pays for a covered vehicle that is damaged by anything other than a collision. Vehicle is stolen, vandalized, glass breakage, acts of god such as a tree falls on your car.
4. Property Damage Liability – pays for property damage to others as well as defense and court expenses.
5. Personal Injury / Medical Payments – this will cover the driver and passenger’s injuries regardless of fault. This is the only coverage that would apply if a driver is responsible for injuring themselves in the event of an accident.
6. Uninsured / Underinsured Motorists – covers injuries and in some cases, property damage when you are involved in an accident with another party who does not have a commercial auto insurance or carry enough insurance.

Take note that if the driver was driving their own vehicle, they would not be covered. This coverage only covers vehicles that are owned by the business and when driver is an employee of the business.

Understanding Non-Owned and Hired Auto Insurance (HNOA)

If you choose to rent or borrow vehicles for cannabis transportation, or if your employees use their personal vehicles for business purposes, you should consider hired and non-owned auto insurance. This type of policy can cover commercial liability expenses resulting from accidents involving borrowed (owned by employee) or hired vehicles (such as rental cars) for business use.

This specific coverage will commence if there is an accident and your company is found legally liable. Non-owned and hired auto liability insurance mainly covers bodily injury and property damage caused by a vehicle you hire (rented or borrowed vehicles) or caused by vehicles owned by others, including vehicles that are owned by your employees.

Personal Auto Insurance and HNOA

A large number of cannabis business owners assume that, a personal auto insurance policy will sufficiently cover damages and injuries should an accident happen to an employee, while using their own personal vehicle to deliver cannabis. The personal auto insurance policy can cover damage to the vehicle that is owned by the employee, but it will not cover the business if the injured or affected party decides to sue. HNOA kicks in if a claimant named your company in a lawsuit.

You should also know that the limits on a personal auto policy are usually much lower compared to a business auto policy.

Business Auto Insurance and HNOA

 There is a difference between business auto insurance and hired and non-owned auto insurance:

1. Business auto insurance can be enough to cover all vehicles that are owned by the business and are used for business purposes.
2. HNOA policy only covers vehicles that are hired or borrowed by the business for business use.

By getting the proper insurance policy for your cannabis operation, your employees, your business and your ability to transport cannabis products, can be fully covered.

With over 10 years of experience helping cannabis businesses protect their investment, here at Cover Cannabis we are more than happy to provide you with a free quote and walk you through the different cannabis insurance options available for your business.