Does home insurance cover cannabis? The answer may infuriate you

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While cannabis is still classified as a highly dangerous drug on the federal level, there’s no denying bud is big business.

Cannabis is one of the fastest-growing industries in the country, with a record $17.5 billion in sales last year, up 46% from the year before. Since an ounce of marijuana can cost hundreds of dollars, you may be keenly interested to know whether your home insurance would protect you if your cannabis was ever stolen or destroyed. After all, most policies cover trees and houseplants, so why not cannabis?

The current situation is complicated, to say the least — and once you learn the truth about your policy, you may decide it’s time to look for a better one.

What costs can be covered?

First off, it’s important to note that any medicinal or recreational cannabis you’re hoping to protect has to be legal for you to own.

In the 2011 case of Barnett v. State Farm, the courts ruled that State Farm had no obligation to cover plants seized by police for being in excess of the allowable limit in California.

Assuming your bud is on the up and up, your homeowners insurance policy could cover you in one of two ways:

Personal property protection

This kind of coverage will help you replace all kinds of stolen or damaged property, including furniture, electronics, art, jewelry and more.

Your policy will list coverage limits for different types of products. Coverage for trees, plants and shrubs is generally capped at about $500 per item, according to the Insurance Information Institute.

The tricky thing is figuring out how your insurance company would classify your items and how it would decide what they’re worth.

In the 2012 case of Tracy v. USAA, the insurer offered $8,800 to cover the loss of 12 medical marijuana plants — a much lower amount than the $45,600 the owner had requested. The owner sued, but the courts ruled that since cannabis is still prohibited federally, USAA was under no obligation to cover the loss at all.

Liability protection

This kind of coverage helps protect you from lawsuits for injury or property damage you cause to other people.

If your policy includes the right coverage — and cannabis use isn’t excluded — you may be protected from costly bills in the event that someone overindulges during a party at your house.

Liability limits generally start at about $100,000.

Why isn’t legal cannabis always included?

Since the federal government still considers cannabis a Schedule 1 substance — a drug with “no currently accepted medical use and a high potential for abuse,” like LSD or heroin — many insurance companies want nothing to do with iThat’s doubly true if the insurer operates in more than one staAs a result, it’s common for cannabis plants and products to be specifically excluded from homeowners insurance policies
Even if an insurer is willing to cover cannabis, it’s rare to see them openly admit it. Allstate made headlines in 2014 when it told Colorado residents they were in good hands.

Still, despite most insurers’ obvious discomfort, it’s worth trying to make a claim if your legal weed is stolen or destroyed.

Possession limits are so small in many states that it’s possible your company won’t bother to fight your claim. And several states, like Oregon, have passed laws that make it illegal to refuse to honor a contract based on the fact cannabis is prohibited under federal law.

How to ensure you're protected

As cannabis laws evolve, insurance companies will, too. It’s likely that providers will be less cagey in future years about whether or not your cannabis is covered.

For now, the easiest way to find out whether your insurer has your back is to look at your individual policy — or better yet, call the company and ask.

If the answer is no, or you don’t get a straight answer at all, it may be time to switch to another insurer.

It’s a good idea to compare home insurance policies, anyway, because you could discover significant savings with another provider. The Insurance Information Institute recommends checking around for better rates every six months.

If it’s been a lot longer than that since you last compared quotes, you could be overpaying for your policy by $1,000 or more. The same is true for car insurance.

Even if your insurer does cover cannabis, it’s worth taking a few minutes to ensure you’re paying a fair price for the protection your policy provides.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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