Marijuana and Your Insurance: Does It Make a Difference?

By: Chris Ward

You’re no doubt aware of the whirlwind of changes regarding marijuana legalization, which have swept the country in the last few years. These new laws make marijuana use for both medicinal and recreational purposes (depending on the state you live in) legal and easily accessible for the first time. Though this is good news for many people, you may wonder what consequences marijuana use has on your auto, homeowner’s, life and health insurance.

This isn’t always a straightforward question, as the rules can vary quite a bit due to several different factors. To help you navigate this sometimes complex issue, let’s cover all the aspects of this topic that you need to know in order to make an informed decision.

Your Life Insurance

Unfortunately, life insurance underwriters don’t take a low-key view concerning marijuana use. Also, the differences in how they’ll calculate your rate are astonishingly varied – so you must do your due diligence to find the best policy for your needs.

That said, the heart of the matter is locating an insurer that won’t designate you as a smoker because you use marijuana. Since the rates for smokers is quite often triple compared to standard nonsmoker rates – this is a critical issue.

Basic Principles

Though every company has different rules and policies, here are some basic principles that will give you some general guidance. Typically, you have the best shot at being offered a nonsmoker rate, if you use marijuana very infrequently and have a prescription.

If you’re a recreational user (with no prescription), it’s still possible to get a standard nonsmoker rate from some companies. Again, you’ll need to use marijuana infrequently and rates which are better than standard (often called “preferred” or other terminology) probably won’t be available to you.[1]

Examples

To give you an idea of just how different competing insurers rules can by, here are a few examples as reported by financial advice site NerdWallet. Prudential has a standard plus nonsmoker rate policy if you use marijuana twice a month or less (and don’t test positive for it).[2] In stark contrast, AIG has a preferred best nonsmoker rate policy – but you have to use marijuana only twice a year at most (though their standard nonsmoker rate allows marijuana use 2x per week). At Lincoln National, you can get a standard nonsmoker rate if you smoke cannabis twice a week.[3]

As you can see, there are significant differences from policy to policy – so you’ll need to speak with several different insurance companies to get the best deal.

Your Homeowner’s (or Renter’s) Insurance

If your home (whether you own or rent) is covered by an insurance policy, you may wonder if your marijuana is protected. It is part of your personal belongings and present in your residence – so you might assume that it’s covered from theft, flood, fire and other circumstances laid out in your policy.

A Complex Question

Yet, it isn’t that straightforward, as some insurers have been fighting back regarding this issue. Since federal law still classifies marijuana as a Schedule I drug that’s illegal to possess or use – the insurers claim that they shouldn’t have to reimburse their policyholders for it. There was a recent court case about this very issue, where the judge upheld the insurer’s argument (meaning they didn’t have to pay the claim).[4]

State Laws Coming Into Play

Just as the states decided to make their own laws about the legality of marijuana within their own borders (in defiance of federal law) – some are doing the same regarding insurance claims and rules. For example, recent legislation passed in Oregon, requires insurance companies to reimburse policyholders for the value of their marijuana – just like any other legally-owned personal possession (provided they experience a covered event like theft).[5]

Notifying Your Present Insurer

If you already have a homeowner’s or renter’s insurance policy, you may think that you don’t need to worry about this question. Or, you may not care if your marijuana is covered, as you don’t tend to keep too much of it (by value) in your home.

Yet, if you’re legally growing marijuana in your home, or using a room in your home (or your garage) to process the marijuana – this could invalidate your entire insurance coverage. A case in point was a man who burned down his home, while carrying out a process called butane extraction. By pulling liquid butane through the minced marijuana leaves, this allowed him to extract the THC and produce honey oil.[6]

After one such extraction session, the homeowner decided to sample the product by lighting up the honey oil. Unbeknownst to him, some of the butane hadn’t yet evaporated – and it ignited when he struck his lighter. The end result was a fire that burned down his home. When the insurance company learned that his legal marijuana growth operation was the culprit, they denied his claim. The homeowner appealed, but the courts upheld the insurer’s decision – they did not have to pay.[7]

While this is a rather extreme case, as the homeowner was engaged in some highly technical and risky operations – it’s better safe than sorry in this regard.

Your Auto Insurance

If you’re getting new auto insurance or wonder how marijuana use impacts your current policy, the answer is that it doesn’t in most cases. Insurance companies don’t typically ask if you drink alcohol – only if you’ve ever been charged with driving while drunk. In the same way, they don’t care if you smoke marijuana – but they will be quite interested to learn if you’ve been slapped with a marijuana-related DUI (called a DWI in some states).

States don’t have a separate offense just for marijuana, but it’s illegal to operate a motor vehicle while stoned or high in every state in the country. The penalty for doing so is a standard DUI – which can send your insurance rates through the roof. If you get too many DUI’s, you may even have to purchase special insurance with extremely onerous rates.

Laws Vary By State

A running theme when it comes to marijuana, individual states have set their own policies on how they handle marijuana use and driving, sometimes informally referred to as “drugged driving,” the penalties can be severe.[8]

Per Se Marijuana Laws

Some states use THC blood tests (or sometimes urine tests), having set an allowable limit above which you’ll be charged with a DUI. Among states that employ the allowable limit method, some have set their limit at zero (meaning you cannot have any THC in your system).

In states that use these per se DUI rules, just having more than the permitted amount of THC in your body is sufficient to charge you. Officials don’t have to show that you demonstrated any physical or mental signs of impairment at all.[9]

Evidence-Based Laws

Other states handle marijuana-related DUIs differently, with some using a combination of blood tests and an examination for physical signs of impairment. In these states, a blood test over the permitted limit isn’t enough on its own to warrant a DUI. Officials will take both the results of your blood test and your physical exam for impairment into account – and then decide whether or not to charge you with a DUI.

The last group of states takes this a step farther, eliminating THC limits and blood tests altogether. You’ll be checked for physical signs of impairment. If you fail to pass, you’ll then be cited for driving while under the influence of marijuana.[10]

A Word of Caution

You may believe that you have no reason to be concerned if you live in a state that only uses signs of impairment as their benchmark for a DUI (and no blood tests). Yet, it’s important for you to remember, that even if you’re a resident of a certain state – you’re subject to the laws of another state when driving through it.

Thus, if you visit neighboring states from time to time, are traveling for work or driving half-way across the country to see relatives – you could pass through states where THC limits are enforced. Therefore, it’s important to be aware of this fact, and to discontinue marijuana use far enough in advance for your THC levels to drop below acceptable limits.

Your Health Insurance

With such a measurable impact on your life insurance rates, you may naturally conclude that marijuana use will have a similar effect on your health insurance costs. Surprisingly, this isn’t the case – and you have the Affordable Care Act to thank for this. According to the ACA, it’s illegal for underwriters to refuse to offer you health insurance due to a pre-existing condition. They’re also only permitted to request some basic information – and whether you use marijuana isn’t one of the allowable questions.[11]

Therefore, you can use marijuana to your heart’s content, and it won’t have any impact on your ability to either get coverage or on the rates that you’ll pay.

A Double-Edged Sword

While having health insurance companies turn a blind eye to marijuana use is good news on the one hand – on the other hand, it comes at a price. Since it’s the federal laws categorizing marijuana as a Schedule I drug that’s illegal to possess or use that forces insurers to leave it off their health questionnaires (when qualifying you for insurance) – they also can’t cover it as a prescribed medication. In other words, the federal law makes insurers blind to marijuana when you apply for coverage – but also blind to it when it comes to paying for your marijuana prescription.[12]

So, you’ll have to pay for any marijuana entirely out of your own pocket (even if you have a valid prescription). This can be a difficult pill to swallow, especially if you’ve been trying to save money on your medical costs. While working with a qualified group health insurance broker, or just comparing rates on policies for individuals on your own, can shave off a significant amount on your monthly premiums – all the comparison shopping in the world won’t lead you to a policy that covers medicinal marijuana.

[1] https://www.nerdwallet.com/blog/insurance/life-insurance-marijuana/

[2] Ibid.

[3] Ibid.

[4] https://www.huffingtonpost.com/entry/ultimate-guide-to-marijuana-use-and-insurance_us_58f7b9ece4b0c892a4fb74d4

[5] Ibid.

[6] https://michigan-marijuana-lawyer.com/growing-marijuana-in-your-home-may-cost-you/

and http://www.opn.ca6.uscourts.gov/opinions.pdf/15a0144n-06.pdf

[7] Ibid.

[8] http://norml.org/legal/item/colorado-drugged-driving

[9] https://www.criminaldefenselawyer.com/resources/criminal-defense/dui-and-dwi-charges/marijuana-dui-laws.htm

[10] https://www.huffingtonpost.com/2013/12/31/marijuana-dui_n_4520129.html

[11] According to Jackson Holtz, who is a spokesperson for the Group Health Cooperative in the Seattle area: