Providing First-Rate Insurance Solutions for the Dietary Supplement Industry.

As one of the preeminent brokers within the dietary supplement industry, we can help companies navigate carriers, negotiate ingredient exclusions, identify industry-specific challenges and considerations, and provide comprehensive insurance solutions that protect raw materials suppliers, manufacturers, distributors and retailers, formulators, testing labs and industry consultants. Our in-house team delivers the expertise to handle and place every kind of commercial insurance a supplement company may need:

• Product liability
• Property
• Professional liability
• Directors and officers
• Automobile
• Cyber liability

• Employment practices
• Workers’ compensation
• Transit/cargo
• Product Contamination/Product recall
• Clinical trials
• Umbrella

Call us today at (626) 535-1459 to make an appointment and get the best policy available, custom fit for the dietary supplement industry.

For additional information about our Dietary Supplement Practice Group, please contact:

Greg M. Doherty, CPCU ARM
Managing Director, Dietary Supplement Practice Group
(626) 535-1409
gdoherty@boltonco.com

Chris Morey
Associate Producer, Dietary Supplement Practice Group
(626) 535-1459
cmorey@boltonco.com

Interested in Learning more about the Dietary Supplement Industry? Take a look at this handy guide about the Dietary Supplement industry:

 

Dietary Supplement Product Liability Insurance – Basics

  1. If you are a company making, distributing or selling any form of dietary supplement, you need product liability insurance. First, anyone who ingests a dietary supplement and gets sick can sue your company for injury. Insurance coverage will cover the cost of attorneys to defend you and determine if or how much of a settlement is required for the injury. Additionally, any legitimate vendor that may sell your product (large health food chains, mom & pop vitamin shops, or online retailers) will want to protect their risk and will expect you to have a policy in place. See more here. For more details on product lawsuits, see more here. 
  2. Insurance companies consider dietary supplements a “high hazard” risk. Additionally, many insurance carriers will refuse to provide coverage for dietary supplement liability both due to the risk factors and lack of experience (more on that later). Those that offer policies obtain them in their “surplus lines” insurance market from underwriters that specialize in “high hazard” products. For more details on Risk Avoidance, see more here.
  3. Dietary Supplement Product Liability coverage is designed to protect a company from injury claims from those that have who have consumed your product. Product Liability insurance policies DO NOT cover product recalls. Though some liability insurance policies will claim that they cover product recalls, they will be severely limited in scope. However, it is possible to get a separate comprehensive product recall coverage policy. To learn more about product recall insurance, go here.
  4. Understand with a “high hazard” product liability policy, that insurers will look to get full payment at the start of the policy. There are additional companies that will provide financing alternatives for additional fees.
  5. You will need to make sure that all of your products of coverage comply with the specific ingredient exclusion list utilized by each carrier. Some ingredients on the carrier exclusion lists can be negotiated/removed by your broker for product coverage.
  6. Generally, it’s important to understand your product liability insurance will not cover “false advertising” (ie. fake or unsubstantiated claims).  See more here and here.
  7. You should consider and discuss with your broker the following policy options during the negotiation:
  • Additional Insured Vendors coverage – this provides limited coverage for any vendors that distribute or sell your product. Your vendors will wish to see proof of such additional insured status prior to starting a working relationship. See more here.
  • Defense costs outside of, and in addition to, the aggregate limits of liability – this additional coverage expands your policy’s ability to defend claims.
  • Additional Insured status for Sponsors of Trade Shows or Landlords – much like the Insured Vendors coverage, this provides coverage for trade show and convention sponsors or lessors of premises.
  1. Do not assume that a fulfillment house or storage facility that stores your product will have the proper fire insurance coverage for your product. It is nearly always better to insure your own property than to assume someone else is going to do so. See more here.
  2. Various insurance carriers will have different restrictions to specific ingredients, and an individual carrier’s list may change over time. Do not assume that a future policy will have the same allowances of your existing policy. Business owners that have products that include excluded ingredients may find their coverage severely limited or nullified. However, a knowledgeable broker may be able to negotiate away some ingredient restrictions depending on the types and quantities of those ingredients.
  3. If you are a manufacturer, make sure that any new products that you create meet the same ingredient guidelines and don’t run afoul of a carrier’s individual ingredient exclusion list.
  4. Make sure that you disclose any serious adverse event reports (SAERs) or other potential claim incidents if requested by the insurance carrier. All applications have a question worded similarly to the following: “Do you know of any event or circumstance that might give rise to a claim under this proposed insurance?” Withholding such information, even if you do not consider it relevant, could be grounds for rescinding your coverage. For GMP Issues, see more here. For AER Issues, see more here.
  5. The best way you can protect yourself is to have a knowledgeable insurance broker who understands the dietary supplement product liability market. Keep in mind that is not the broker that sets rates, the carriers do. As a niche market with specific guidelines, working with a seasoned professional product liability insurance broker can present your company well to various carriers can get you the policy that best suits your needs and company’s future growth. See more here and here. 

 

Dietary Supplement Product Liability Insurance – Advanced Topics

  • Be Aware the Classifications in the Dietary Supplement Industry – There are many emerging sub-classifications for various types of Dietary foods and supplements, and it is surprisingly easy to end up paying more for coverage for your product than you should. From fortified foods to Green super-foods, everything is in the name. See more here.
  • Product Liability Coverage for Online Supplement Sales – If you are considering selling partly or totally via the Internet, even large online distribution channels like Amazon, you still have risks. Online dietary supplement companies still need to obtain liability insurance coverage as your risks will largely be the same as if you sold through a retail store. See more here.
  • Notoriety with Sports Nutrition Products – Products that are aimed at bodybuilding enthusiasts are often viewed by underwriters as “high risk” and are similar to weight loss and sexual enhancement products. Products within these categories have the highest premiums.  See more here.
    • You need to understand the difference between “claims-made” and “occurrence” coverage – Dietary Supplement Product Liability insurance is nearly always “ offered on a claims-made” basis. “Claims-made insurance” is triggered by the date you first became aware of the possibility of a claim and/or a claim is actually made against you, and when you notify the insurer of your knowledge of the claim or potential claim. See more here and more here and more here. 
  • Considerations with Written Contracts for Dietary Supplement Companies – Dietary Supplement Product companies should use their insurance broker to review the insurance provisions within any contract to make sure your policy complies with the specifics insurance requirement listed. See more here.
  • Be aware of Additional Dietary Supplement Liability Policy Exclusions – We talked in the basics about what is often excluded (ingredient exclusions or false advertising) from liability policies. However, there are numerous other exclusions and requirements within all liability policies. Make sure you talk to your broker so that you understand all the limitation and restrictions within your policy. See more here.
  • Dietary Supplement Liability Coverage for Foreign Companies Entering the U.S. Market –  Companies that are entering the U.S. Market face the complex task of complying with the US regulatory market. In addition, they must tackle the issue of U.S. product liability insurance not only for their own acct but to satisfy the insurance requirements of potential vendors/customers in the US market. See more here.
  • Mergers and Acquisitions Issues – the acquisition of a business should be a positive time for a Buyer and a Seller, however, a common misunderstanding can lead to a shortfall in coverage if not properly considered. Hence, the Extended Reporting Provision AKA the Tail Liability Policy is there to provide some relief. See more here.

 

 

Dietary Supplement Insurance Definitions

Dietary Supplement – The Dietary Supplement Health and Education Act of 1994 (“DSHEA“), is a 1994 federal statute which defines and regulates dietary supplements. DSHEA defines the term “dietary supplement” to mean a product (other than tobacco) intended to supplement the diet that bears or contains one or more dietary ingredients, including a vitamin, a mineral, an herb or other botanical, an amino acid, a dietary substance for use by man to supplement the diet by increasing the total dietary intake, or a concentrate, metabolite, constituent, extract, or combination of any of the aforementioned ingredients. Furthermore, a dietary supplement must be labeled as a dietary supplement and be intended for ingestion and must not be represented for use as conventional food or as a sole item of a meal or of the diet.

Nutraceutical – a foodstuff (as a fortified food or a dietary supplement) that is held to provide health or medical benefits in addition to its basic nutritional value — called also functional food.

Sports Nutrition – A sub-set of the dietary supplement industry that is intended focused on improving athletic performance through the types and quantities of foods and liquids consumed by the athlete.

Dietary Supplement Product Liability Insurance – An insurance policy that provides liability coverage to the manufacturer, wholesaler or retailer of a dietary supplement product.

Serious Adverse Event Reports (SAER) – an adverse event that results in death, life-threatening experience, inpatient hospitalization, persistent or significant disability or incapacity, or congenital anomaly or birth defect, and/or an adverse event that requires, based on reasonable medical judgment, a medical or surgical intervention to prevent one of these outcomes.

Good Manufacturing Practice (GMP) Inspections – facility inspections done by the FDA to determine proper operating practices.

Claims-Made Insurance – coverage is triggered by the date you first became aware of the possibility of a claim and/or a claim is actually made against you, and when you notify the insurer of your knowledge of the claim or potential claim. The insurer’s policy that is in force on the date you became aware and give notice is the policy upon which the insurer must defend and settle the claim.

Policy Aggregate Limit – The total liability of the Company shall not exceed the Aggregate Limit of Liability for all Damages and Claim Expenses arising out of all Claims first made during the Policy Period. Each individual loss that occurs throughout the policy period will erode the Policy Aggregate Limit.

Check out some of our recent articles on Dietary Supplements:

Dietary Supplement Liability Insurance

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