Insurers weigh whether stolen medical marijuana is covered loss
UKIAH, Calif. (AP) – A growing number of medical marijuana users whose backyard pot plants were stolen by thieves or commandeered by police have succeeded in getting insurance companies to reimburse them for the loss.
But just as medical marijuana was beginning to gain acceptance as an insurable belonging, the Supreme Court’s recent ruling in an Oakland, Calif., case has cast doubt on the future of such payments.
The dollar amounts aren’t huge – after all, the missing pot is supposed to keep one person healthy, rather than be sold on the street, where high-grade marijuana is more expensive than gold. But it’s real money to a sickly policyholder. One insurer paid $12,375 to a man who lost 3 pounds of pot to an armed intruder.
It’s not like anyone with a stash can file a claim. Insurers, which are state-regulated, don’t cover illegal property.
But they generally agree that marijuana becomes a homeowner’s bona fide personal property under some state laws when the policyholder has permission to grow or possess it for medical reasons. That’s possible in the eight states where medical marijuana laws are in conflict with federal drug laws – California, Alaska, Arizona, Colorado, Hawaii, Maine, Oregon and Washington.
Even though these laws are in conflict with federal law barring use or possession of marijuana, major insurance companies have made at least a dozen such reimbursements, according to a series of interviews by The Associated Press. Most of the claims for stolen plants or harvested marijuana have been filed in California.
The claims have forced insurers to enter a legal gray area.
”How do you determine its value? Who is going to be your expert?” asks Lisa Wannamaker, a spokeswoman for Allstate, which has paid four such claims in California. ”There’s no set process in place on how to deal with it.”
Any developing clarity disappeared in May, when the Supreme Court ruled that clubs dispensing medical marijuana according to state laws could not use a ”medical necessity” defense against federal anti-drug laws. The court noted that Congress declared that marijuana has no medicinal value.
However, the justices said they specifically did not resolve such constitutional questions as whether states can experiment with their own laws, or whether individual Americans have a right to marijuana as a pain remedy.
Medical marijuana advocates say insurers are treating the ruling as political cover despite these unresolved legal questions.
”If an insurance company is looking for an excuse to save a few dollars and deny a claim, I suppose they can use the Supreme Court case as an excuse,” says Keith Stroup, executive director of the National Organization for the Reform of Marijuana Laws.
None of the major insurance companies questioned said they received new marijuana claims since the ruling. State Farm, citing federal law, will deny future claims, and the other insurers will give them renewed scrutiny, spokesmen said.
”It’s clearly stated in the homeowners’ policy that we will not pay for illegal activities,” said Lonny Haskins, the State Farm spokesman.
At least three other companies besides Allstate have paid claims on stolen medical marijuana in California. They include the California State Automobile Association, Travelers Indemnity Co., and OneBeacon, which made the payments when it operated as CGU California Insurance.
In September 1999, Robert DeArkland of Fair Oaks became the first person known to be reimbursed for marijuana through household insurance. He received $6,500 from CGU California Insurance for 13 marijuana plants seized from his garage by sheriffs’ deputies.
Other reimbursements haven’t been so smooth.
Chris Miller haggled with Allstate over the value of 17 plants that Placer County sheriff’s deputies confiscated when they raided his Citrus Heights home in March 1999. He was exonerated of marijuana cultivation charges after claiming an exemption under Proposition 215, the 1996 California ballot measure that authorized medicinal marijuana.
Wannamaker said Allstate first offered Miller $1,272, but later agreed to a $4,900 settlement
In less than two years, the California State Automobile Association has made ”less than six” such payments, according to Joe Ponkovich, CSAA’s manager of claims administration.
One was to a Ukiah man who reported that his backyard plants were chopped down in September 1999. The man, an Air Force veteran who has a doctor’s recommendation to smoke marijuana for anxiety related problems, asked not to be identified to avoid drawing more attention from thieves.
CSAA sent an investigator to talk to local deputies, who confirmed he was registered to grow the plants and had filed a police report. The Ukiah Cannabis Club helped assess the plants’ value.
He made the claim at the suggestion of a police officer, and couldn’t believe it when he got a $2,500 check for his five plants.
”You’ve got to go through the motions and the paperwork. And that’s what I did with the herb,” he said, pointing to the insurance documents that classified each 7-foot stalk under language protecting policyholders against a loss of up to $500 for ”trees, shrubs and other plants.”
The Ukiah man didn’t want to sound ungrateful, but he noted that the plants were undervalued.
”Five hundred dollars on the outside would buy you 2 ounces,” he said. ”Each one of these had a pound and a half. They were huge buds.”
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