As a property owner, the list of boxes to tick and concerns to consider may seem never-ending. For many, cannabis will be nowhere near the top, if even on the list at all. Here we’ll explain why it should be…
How does cannabis affect insurance?
Since the early 2000s, increasing numbers of rental properties have been targeted by gangs of cannabis cultivators looking to house their criminal activities. A surprisingly wide variety of buildings have been used for these purposes and, in the last 12 months, cannabis farms have been found in a large partially-occupied office complex, a pub basement, a light industrial unit situated next door to a Police Station and a large unoccupied country mansion. The country mansion was let on a short-term basis over the winter months and, acting on a tip-off, police uncovered over 1,000 cannabis plants at various stages of growth.
In the space of four years, the number of cannabis farms detected by the police in the UK increased by more than 150%, with criminals shifting away from large farms to smaller scale production. According to reports, 94% of cannabis farms are now located in domestic premises and around 25 farms or factories are being discovered by police per day.
Other than the wider social implications, the use of rented property stock for this purpose presents a real problem to property owners. The cultivation of cannabis will often involve damage being caused to the electrical installation as lighting / heating is introduced to assist cultivation, ceilings may be removed and windows boarded. In addition, there is a significant risk of fire caused by the disruption to electrical services or overheating.
In fact, Aviva previously reported a 30% year-on-year increase in cannabis claims, which stresses the importance of an adequate insurance policy to cover damages made such as firms, and water damage.
Director, Simon Jones comments: “With their illegal nature, more care is taken to cover the tracks of a cannabis farm. People go as far as to manually rewire electricity systems, rip out wiring and tamper with electricity meters so their electricity usage isn’t recorded. As a result, cannabis fires are on the rise.”
Whilst some policies will provide cover against such damage as malicious damage, others will include exclusions that would apply. For example, some policies exclude damage arising from any `criminal activity` whilst others exclude malicious damage caused by tenants. Indeed, even where there are no exclusions, insurers will on occasion seek to restrict their liability for malicious damage and, as ever, the best advice is to check policy wordings carefully at the time of taking insurance and to take all reasonable steps to protect your property from being used for this purpose.
Would you know if your property was a cannabis farm?
With new varieties of crop being introduced, the time taken to cultivate one crop can be as short as 9 weeks. The worry here is that scheduled quarterly checks by landlords or agents may miss the cultivation process, leaving the property in a state of disrepair.
With this in mind, we would urge property owners, landlords and managing agents to take precautions to protect their properties, including regular site inspections, keeping a log and knowing the tell-tale signs to look out for:
- A strong/pungent and sickly sweet smell
- Constantly covered or blocked-off windows. Curtains or black out blinds pulled
- Strong and constant lighting day and night
- High levels of heat and condensation on windows, peeling wallpaper, mildewed walls
- Excessive use of deodorisers and air freshener
- Constant buzz of ventilation
- Any recent signs of works to electrical installations such as lampposts
- Tenants requesting short term lets, wanting to pay in cash
Quadra Claims Services has a dedicated Real Estate claims service and a wide experience of dealing with claims in this sector. We have developed a range of services which includes pre-loss, first notification of loss and TPA arrangements through to our dedicated loss adjusting services.