In order to properly underwrite marijuana related risks over the past year most insurance carriers have changed their approach to revenue verification. As I addressed in my article the pricing of marijuana business insurance your gross annual revenue is the information used when pricing the Premises & Product Liability coverage for your marijuana business. As a result, it’s imperative that your marijuana business insurance application provides accurate revenue information when submitting your application for coverage. Without accurate revenue information your insurance premium will be incorrect.
In order for insurance companies to make certain they are collecting the correct premium for the exposure all marijuana business insurance policies are written on a policy form which states the policy is auditable. These policies are auditable because of the extreme growth many businesses in this industry have exhibited and are used as a mechanism to verify revenues. Again your revenue is the main rating basis used to determine your Premises & Product Liability premium. Because of this premium audits are implemented at the mid-year and expiration point of a Premises & Product Liability policy term.
Revenue Verification Procedure
The procedure used to obtain accurate and verifiable information is a Profit & Loss Statement. This documentation is provided by your business, usually from your point of sale systems or financial/accounting records. The information required is focused exclusively on gross annual sales at the mid-year point of the policy and at policy expiration for the preceding 12 month period.
If at the mid-year audit your business exceeds your revenue projections for the year you will be invoiced at mid-term for anything above your projected annual sales. Another audit will be performed at the end of the policy period so if you exceed your sales projections the company will collect the additional premium after the policy expires.
I specialize in marijuana business insurance, this article is meant to educate you with the importance of providing accurate and verifiable revenue information when you submit your marijuana business insurance application. If you’re interested in discussing marijuana business insurance or would like to receive a quote please call me at (503)-922-4847 or select “Request a Quote” below.
The articles posted in this blog are intended to provide insight and is not a substitute for consultation with a licensed insurance broker to address your particular risk or circumstance.