Insurers Wary of Claims of Pot Losses

After law enforcement officials confiscated 13 marijuana plants from Robert DeArkland’s home in 1998, the Fair Oaks man filed a claim with his home insurance agent.

Before long, he said, CGU California Insurance Co., now called OneBeacon Insurance, paid him $6,500 for his lost property. All DeArkland had to do was show that a doctor had approved his use of marijuana for medical reasons, which in his case was prostate cancer.

Collecting on such a claim might not be so easy today.

After a U.S. Supreme Court ruling in May prohibiting distribution of marijuana under federal drug laws, some insurance companies began reviewing policies covering the loss, theft or confiscation of the substance.

The high court ruling conflicts with California’s Proposition 215, which in 1996 gave ill people the right to use marijuana for medical purposes.

“With the Supreme Court coming down in May with its decision, it might change how we view these claims,” said Bronwyn Hogan, a spokeswoman for the Automobile Assn. of America, which offers insurance. “These claims are so original, they’re so novel, we need to look at them on a different basis.”

Representatives of Allstate and AAA said their companies are reviewing their policies and will decide whether to reimburse clients for medical marijuana claims.

The claims are extremely rare, they said.

“In the past two years, we’ve had four,” said Bob Daniels, an Allstate spokesman. “Because of the fact that they’re pretty rare, we really look at them on a case-by-case basis.”

AAA has processed six claims by people who lost their medical marijuana, Hogan said.

State Farm Insurance has had none and does not intend to pay on any in the future, said Elenore Williams, a company spokeswoman.

“We will not pay for illegal activities,” Williams said. “As a result of the Supreme Court ruling, State Farm will deny claims in the future for medical marijuana.”

Many of those involved with the issue in California say the Supreme Court’s ruling does not invalidate Proposition 215. Federal agencies would not have the staffing to bring charges against the thousands of medical marijuana users, and state courts have resisted convicting defendants using a medical marijuana defense, they say.

Insurance companies should be cautious when handling these claims, said Eric Shevin, a lawyer and coordinator for the Los Angeles chapter of the National Organization for the Reform of Marijuana Laws, which advocates legalized marijuana.

Shevin said refusing to pay could open them up to lawsuits.

Scott Imler, president of the Los Angeles Cannabis Resource Center, said the club registers its members and issues them photo identification cards to alert police to patients’ rights to possess marijuana.

Imler said the center requires members to provide letters from their doctors recommending marijuana for medical reasons. The letters are verified with the doctor, whose license is verified with the California Medical Board, he said.

Members cannot share a marijuana cigarette or carry more than one at a time, he said.

“Sometimes our members get a ticket for having marijuana,” he said. “[But] we haven’t had a single case go to trial in 4 1/2 years.”

DeArkland emphatically supports the use of medical marijuana. “I smoke between five and seven, sometimes eight, joints a day. It depends on the pain,” he said. “The people of California legalized medical marijuana.”