Benefiting You

How using marijuana affects your insurance

There are 29 states, plus the District of Columbia, Guam and Puerto Rico, that allow some form of marijuana use, according to the National Conference of State Legislatures. But producing, possessing or using this Schedule I drug is still against federal law. If this quandary leaves you scratching your head, you’re not alone.

No matter where you live in the U.S., if you use cannabis for medicine or recreation, it’s important to understand how it affects your insurance. Here are ways marijuana use affects five common types of insurance.

1. Health insurance
Even though it’s legal in some states to use pot for medicinal purposes, your health insurer won’t cover it. Since cannabis is a Schedule I drug that hasn’t been approved by the U.S. Food and Drug Administration, insurance companies won’t reimburse any amount of pot purchases.

If you have a qualifying high-deductible health plan and use a health savings account to pay out-of-pocket medical expenses, you’re still out of luck. You can’t include cannabis (or any controlled substance) that isn’t legal under federal law as a qualified medical expense for HSA purchases or as a deduction on your income taxes — even when it’s legal in your state.

2. Life insurance
Life insurance rates are primarily based on your age, health status and lifestyle risks (such as being a skydiver or a mountain climber) when you purchase a policy. Life insurance companies know cigarette smoking kills 480,000 Americans each year, so they charge tobacco smokers and users higher premiums than nonusers.

Some life insurers may treat marijuana and tobacco use the same way when setting rates, but others don’t. Instead, the underlying medical reasons why you use cannabis in the first place — such as for symptoms of multiple sclerosis or insomnia — are given the most weight.

How pot use affects your life insurance rate depends on the company, why you use the drug and how often you use it. While you might be tempted to omit marijuana use from a life application, your beneficiaries could be denied a payout if the insurer proves fraud.

3. Auto insurance
Just like driving under the influence of alcohol causes auto insurance rates to skyrocket if you’re charged with driving under the influence or driving while intoxicated, so does driving high. Currently, there’s no separate law, violation or equivalent breathalyzer or impairment test for driving while under the influence of marijuana.

Depending on the laws in your state, getting a DUI could result in your insurer giving you the boot or raising your premium up to 298%, according to a 2017 study. After having a canceled policy, you’ll likely be forced to buy expensive SR-22 coverage to get back on the road. So, getting into a car accident after using cannabis can cause your driving record to go up in smoke.

4. Homeowner’s insurance
If you possess marijuana and it gets damaged or stolen, you may not be covered by homeowner’s insurance. Policyholders in states where cannabis isn’t legal for medical and recreational use typically aren’t protected.

But some home policies treat marijuana just like any other belonging, with reimbursement up to your policy limit (minus the deductible) for perils such as fire, windstorms and theft. However, the value of missing or damaged marijuana you could claim would likely require a negotiation with your insurer.

If you have a state license to grow pot and don’t exceed legal limits, even your plants can be covered by business insurance. Just make sure your insurance company or agent knows, so they can help you purchase the right policy.

5. Renter’s insurance
If you rent your home or apartment and have renter’s insurance, you’ll get coverage for marijuana similar to home insurance. What’s covered for personal belongings, including cannabis, depends on your policy limits and the laws in your state.

As you can see, the insurance implications of smoking or consuming pot are varied and complicated. It doesn’t mean you’ll automatically be denied coverage or charged a higher rate.

To protect your financial future, be forthcoming about your lifestyle and drug use or possession with insurers. Don’t be afraid to contact your insurance company if you have questions. Their job is to keep you safe within legal limits.

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