Court’s Marijuana Ruling Seen as Boon for Insurers

A U.S. Supreme Court ruling that federal drug laws prohibit distribution of marijuana may be just what the doctor ordered for California insurance companies sick of paying claims on lost, stolen or confiscated pot.

People legally using marijuana for medicinal purposes in California have been able to file claims with their insurance companies for payments when their pot was lost, stolen or confiscated by police.

Although medicinal use of marijuana is legal in California under a 1996 voter initiative, a Supreme Court decision in May barring distribution of the drug has thrown into question the validity of such insurance claims in California.

Insurers said Tuesday that they are rethinking their policies regarding claims, and marijuana advocates are crying foul.

“In the last two years there have been four losses [of marijuana] in California where we actually made a payment,” said Bob Daniels, a spokesman for Allstate Insurance, a unit of Allstate Corp. “We are in the process of trying to figure out exactly what our position is going to be in the future.”

Elenore Williams, a spokeswoman for State Farm Insurance in Los Angeles, said the company has seen four or five claims for lost marijuana in the last few years, but she could not specify which of the claims had been paid. She said that, in light of the federal ruling, State Farm “is not going to pay any future claims with regard to medical marijuana.”

Marijuana advocates, meanwhile, warned insurers that refusal to pay claims could open them up to litigation because it is still legal for a patient to grow and use his own marijuana for medicinal purposes in California.

The Supreme Court ruling does not invalidate medical marijuana use in California, said Eric Shevin, an attorney and spokesman for the L.A. chapter of the National Organization for the Reform of Marijuana Laws. “The federal court was clear that it wasn’t ruling on individual patients who had a necessity” to grow their own, Shevin said.