Professional Liability Insurance, also known as Errors and Omissions Insurance, protects a company from lawsuits that claim a financial loss occurred due to the negligent rendering of a professional service. Professional Liability is to the cannabis industry as Liquor Liability is to the restaurant industry. In Liquor Liability cases, firms have been sued for selling, serving, or distributing a product that allegedly caused someone harm. As your cannabis business will likely engage in one of those actions, the government requires you to uphold a ‘duty of care’ within your business operations.
Due to the status of firms with cannabis licenses as professionals who are selling a controlled substance, such firms are held to a higher standard than your average consumer, and must maintain a legitimate standard of performance. If someone alleges that they had a negative experience with a marijuana product you either sold or were involved in the transportation of, they could potentially make a claim against your business. This means that you are accountable for the effects of your products, and any claims of negligence (regardless of their legitimacy) could cost your firm thousands of dollars.
Professional Liability is specifically excluded from a General Liability or Business Owners Policy. While a General Liability policy covers bodily injury, property damage, and in some cases, personal and advertising injury, and product or operations liability; professional liability provides coverage for negligence, inaccurate advice and misrepresentation leading to a direct financial loss to the consumer. Both a General Liability Policy and Professional Liability Policy should be secured for businesses involved in professional services, but it is important to understand the difference in coverage provided by both types of liability policies, so as not to assume that a General Liability Policy will provide all necessary insurance coverage.