The recently passed Cannabis Act is creating a lot of questions in the minds of Canadians. Last week, we provided information for drivers worried about the impact of the Act on the roads of British Columbia. However, there is another pressing concern for owners and tenants of residential properties in the province.
New legislation permits adults to legally purchase, possess, use, share, and cultivate limited amounts of cannabis for recreational use. The law allows the indoor/outdoor cultivation of a maximum of four cannabis plants per dwelling.
How we use our homes impacts our level of risk and the type of insurance coverage we require – for example, running a home business or renting out a basement suite increases our liability. Likewise, legal cannabis cultivation may also increase liability. Moving forward, some residential property owners and tenants may expect a change to property risk assessment and possibly an increase in premiums to accommodate this new risk. Below, is an accounting of what you need to know about the potential implications of the new legislation.
4 Things Residential Property Owners and Tenants Need to Know About How the Cannabis Act May Impact Risk Assessment and Insurance Premiums
1. Cannabis Questions from Your Insurance Broker
Just as your insurer may ask you if you own a pool, trampoline or any other item that may increase your liability, most insurers will now begin asking about the production and/or use of cannabis in the home. Insurers may ask questions related to electricity use, lighting and chemicals used to assist in the growing process. It is essential that these questions be answered honestly to maintain adequate coverage. Otherwise homeowners/tenants run the risk of voiding their policy should a related event (fire, theft, etc.) directly or indirectly result in injury, damage, or loss.
2. Insurance Risks Associated with Cannabis in the Home
Prior to legislation, many insurers acknowledged risk surrounding illicit drugs detailed in Canada’s Controlled Drugs and Substances Act and created insurance policy exclusions accordingly. However, now that the Cannabis Act has legalized recreational marijuana use and cultivation, new exclusions may need to be formulated based on associated risk. Below are increased homeowner/occupant risks that may be associated with cannabis cultivation in the home:
- Fire – From high-intensity lighting and equipment required to grow plants.
- Water damage
- Mold/mildew growth
- Social host liability – Injuries that can occur as a result of a host (primary occupant) sharing marijuana with a guest, or if a minor consumes the drug in any form (edible, etc.).
These risks may result in exclusions within some homeowner/tenant insurance policies and/or increased premiums. On the other hand, some policies may provide specific limits designed to protect you if cannabis plants are stolen or damaged. Therefore, it is very important to review your policy carefully and discuss your intent to grow cannabis with your insurance broker to ensure that you have adequate coverage.
Of course, personal growing operations that exceed the permitted cultivation of four cannabis plants per dwelling will remain illegal and could void claims against a homeowner/tenant policy.
3. The Rights of Condo Owners, Rental Property Owners & Tenants
Many strata councils/condo boards have rushed to put new bylaws in place to ban marijuana smoking in units, on balconies and in common areas. Likewise, cannabis cultivation is also being banned in many buildings as residents worry about damaging moisture and mould. For instance, water damage and fire related to even a small grow-op in one suite can have a sweeping impact on adjacent units. Nuisance complaints can also be made if odor becomes unpleasant for some in neighbouring units.
These bans become trickier when cannabis is being used for medical purposes, and may result in a human rights show-down between a neighbour who complains about contamination to their unit, and a medicinal user who wants to use and/or grow marijuana in their home. Therefore, it is very important to understand your condo corporation’s specific rules regarding the use and cultivation of both recreational and medicinal marijuana. Know before you grow!
In British Columbia, rental property owners have the right to prohibit the growth of cannabis on their properties. While existing tenancy agreements in BC will be deemed to include a no-grow clause for recreational cannabis, property owners are encouraged to review their rental contracts to ensure that all new agreements prohibit the growing and smoking of marijuana, if they so desire. It is the landlord’s responsibility to ensure these prohibitions are clear in tenancy agreements. Again, it comes down to tenants and landlords becoming familiar with the prohibitions in their specific rental contracts and the associated regulations in their province.
4. You Need to Secure an Insurance Broker to Navigate the Change for You
What makes this whole thing a challenge for the insurance industry and homeowners/tenants alike, is that there is little precedence for legal cannabis cultivation. In addition, you can expect each province to have its own unique variances. After all, what’s appropriate to BC (where cannabis use and production are higher than the rest of the country) may not be so for Alberta and so forth. This is why policy holders will need someone in their corner to advise on the state of affairs today, and tomorrow, as changes occur in “real time”. Seek your advice from an independent broker that makes it their business to stay on top of all updates.