Companies that work within the dietary supplement industry have some fairly specific requirements when finding proper insurance for their business and the products that they sell—and with good reason.
The investment associated with securing proper coverage pales in comparison to the potential financial nightmare a lawsuit could create for your business.
Though not difficult to obtain, here are a handful of items you should consider when you are looking to get or renew dietary supplement liability insurance.
1. Choose the Right Dietary Supplement Liability Insurance Broker
Make sure you work with a brokerage firm that is familiar with the specifics of dietary supplements, nutraceutical and sport nutrition products and obtaining coverage for clients. A broker should know how a potential product liability policy could impact your existing general liability, workers’ compensation, and property policies. This niche has many distinctive features, so make sure your broker is up to the task.
2. Understand How Additional Insured Status will Impact Your Existing Coverage
Many startups will often request additional insured status from their manufacturers thinking this will protect them from any potential liability. However, this is rarely the case. Make sure you check with your insurance broker to be clear as to the limits of your additional insured status. If you need additional coverage, then you can obtain your own dietary supplement liability insurance policy.
3. Understand What Your General and Product Liability Policies Provide
- Your general liability policy should cover standard risks like a “slip, trip, and fall” within your facility or store.
- Your product liability policy should cover any bodily injury or sickness that results from your product.
- Both policies should provide you with industry validation for working with manufacturers or appearing at tradeshows.
4. Consider the Cost of Coverage Versus the Risk of Being Uninsured
Many startups are fearful of the cost of potential premiums. Those companies may consider either foregoing coverage or get a policy with limited coverage to save costs. However, I recommend that you consider getting the proper coverage you need for your business and your product. Currently, dietary supplement liability insurance policies are the most affordable they ever have been.
5. Understand How Ingredient Exclusions Can Affect Your Coverage
Every Product Liability policy will have exclusions based on certain types of ingredients. Make sure that your broker is aware of all the ingredients within your product and that you are aware of any exclusions within the policy being offered to you. Should excluded ingredients be within your product, your coverage may be limited or nullified. Additionally, different insurance carriers may have different ingredients on their excluded list. Don’t assume that your new policy will have the same ingredient expectations as your old one.
I hope you found the following tips useful. Having appropriate coverage within the dietary supplements industry is crucial to protecting your reputation and business. For more information about common dietary supplement insurance issues, check out our resource page. If you have further questions, please feel free to reach out to me or Greg Doherty at the Bolton Dietary Supplement Group at 626.535.1459.
We will be attending Natural Products Expo West 2018 in Anaheim, CA on March 8th – 11th. Contact us to set up a meeting.
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