Over the years, you see interesting exclusions added to insurance policies. One such exclusion, which is not necessarily a new one but which has caught on the past 10 years, harkens back to “Dave” not being at home.
It is called by many names, and one such name is the Illegal Manufacturing, Production or Operation [exclusion], meaning loss resulting from
- the illegal growing of plants or the illegal raising or keeping of animals; or
- resulting from the illegal manufacture, production, operation or processing of chemical, biological, animal or plant materials.
Moreover, many Landlord companies’ forms go on to say that “such loss is excluded whether by vandalism or any other cause and whether or not within the knowledge or control of an insured”.
So, when your tenant turns on the stove and makes up some meth, the damages – resulting from any fire or explosion from the chemicals being poorly mixed or any other kinds of damages associated with these operations – are not covered by your landlord policy.
And, when your tenant guts the walls of the bedrooms and turns half of the house into a temperature-controlled growing field of a cash crop, the damages from the walls being moved and the remainder of the damages (let your mind wander) are not covered.
There is no coverage of any type under the policy when Illegal Manufacturing, Production or other Illegal Operations are being conducted. Safeco and all of the major insurers of rental properties exclude this activity or are drawing up endorsements to do so.
Which, on a bit of a sideline thought, makes one contemplate the fixes that will have to be put into the policy forms if the trend to decriminalize the growing of marijuana continues (certainly, that question is up for grabs in California). Damages from this type of operation will still have to be excluded in some manner, as you certainly don’t want that type of operational agricultural or manufacturing damage to beset your rental property.
Regardless of whether someone is growing pot or potatoes or cooking meth inside the home, the operations will damage the home. And, it’s not insurable as it is an intentional act (moving of walls, anyway) to alter the home for this operation. For now, all such operations are illegal and thus your property is not covered for damages resulting from these activities.
So, Landlords: Beware! Pot production is outside the policy’s coverage grants. Ask your property managers to check on your properties regularly to ensure that such activity is not happening, as that is your best source to thwart this type of activity!
Huggins Dreckman Insurance, Insuring Your Success!