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 recall
• Clinical trials
• Umbrella

Call us today at (626) 535-1459 to make and 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 Insurance Definitions

Dietary Supplement – A dietary supplement is a broad term for any product intended for ingestion that contains a “dietary ingredient” (such as a vitamin, mineral, amino acid or botanical) that is intended to be taken orally and add further nutritional value to “supplement” the diet.

Nutraceutical – A nutraceutical is a food or food component that claims to have health benefits, including treatment and prevention of disease.

Sport 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) – notification of an adverse effect by a product or an ingredient within the product.

Good Manufacturing Practice (GMP) Inspections – facility inspections done by the FDA to determine proper operating practices. A certification can be issued upon successful completion of an inspection.

California Proposition 65 – a set of guidelines for ingredients that should be excluded from any products due to toxicity or the potential to cause harm being manufactured or sold within California.

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.

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. Dietary supplements are considered a “high hazard” risk so you can’t compare potential coverage to a more standard auto insurance or personal liability policy. 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 come in contact with 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 their 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 your products do not include ingredients listed with the current California Proposition 65 guidelines. Product liability coverage will rarely cover Proposition 65 actions against your company, or if they do, will be extremely limited in scope.
  6. It’s important that a company be careful not to include any claims that may be considered “false advertising”. Product liability policies will not provide coverage for fake or unsubstantiated claims. See more here and here.
  7. Each dietary supplement product liability policy should consider the following policy options during the initial negotiation to avoid costly additions later:
  • Additional Insured Vendors coverage – this provides coverage for any vendors/customers that transport, distribute or sell your product. The majority of qualified vendors will wish to see proof of such policies prior to starting a working relationship. See more here.
  • Defense costs outside of, and in addition to, the limits of liability – this additional coverage expands your policy’s ability to pay 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 and will often be requested prior to accepting an application.
  1. As a follow-up to the item above, unless you make all your products in-house, make sure that you are listed as “additionally insured” by your manufacturers.
  2. Alternately, do not assume that a fulfillment house or storage facility that stores your product will have the proper liability 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.
  3. Make sure you tell your insurance broker of the specific ingredients within your products. 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.
  4. If you are a manufacturer of dietary supplements of any sort, make sure that any new products that you create meet the same ingredient guidelines and don’t run afoul of either a Prop 65 exclusion or a carrier’s individual ingredient exclusion list. Don’t put your existing policies at risk with reckless product development.
  5. Make sure that you disclose any serious adverse event reports (SAERs) if requested by the insurance carrier, usually worded in as “Do you know of any event or circumstance that might give rise to a claim under this proposed insurance?” Or, should you have Good Manufacturing Practice (GMP) inspections by the FDA, make sure you disclose the content of those meetings within your carrier. 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.
  6. The best way you can protect yourself is to have a knowledgeable insurance broker who understands the dietary 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 sub-classifications for various types of Dietary foods and supplements, and it is surprisingly easy to end up paying more for coverage for your dietary 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 should still consider obtaining liability insurance coverage as your risks will largely be the same as if you sold through a retail store. See more here.
  • Notoriety with Sport Nutrition Products – A good portion of sports nutrition products are considered foods or beverages, instead of supplements and therefore can be reviewed differently by underwriters (ie. a sports drink is a beverage, not a supplement). However, products that are aimed at bodybuilding enthusiasts are often specifically supplements and fall in a “high risk” area of products related to weight loss, sports nutrition, or sexual enhancement. Products of within these categories have the highest premiums due to risk of future payouts. Many bodybuilding supplements use ingredients that cause weight or fat loss that can cause harm if abused.  Additionally, sport nutrition supplements are often seen as the cause (or the excuse) of a famous athletes failed drug test. See more here.
  • You need to understand the difference between “claims-made” and “occurrence” coverage – Dietary Supplement Product Liability insurance nearly always “claims-made” insurance. “Claims-made insurance” is when the 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. 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 any contract especially for the specifics on how coverage should be carried (ie. “claims-made” vs “occurrence.” See more here.
  • Be aware of Additional Dietary Supplement Liability Policy Exclusions – We talked in the basics about what is often excluded from liability policies. You are probably aware that you need to be aware of the specific ingredients in your products. However, product exclusions are not the only things that can get you into trouble. Be aware that there are potential biological or chemical materials exclusions (when a disgruntled employee purposefully mishandles or contaminates a batch of product) or reporting requirements. See more here.
  • Getting Coverage for High Risk Three – Weight Loss, Sports Nutrition, or Sexual Enhancement – Some types of dietary supplement products can be easily abused and cause significant harm (or even death) to those that ingest them. Additionally, coverage for these products is always tricky as they are the most common products to receive payouts. It’s important to know how to present these products to underwriters. See more here.
  • Dietary Supplement Liability Coverage for Foreign Companies Entering the U. Market – Companies that are entering the U.S. Market often have to consider the added complexities of getting their products approved be US regulatory agencies. Additionally, foreign companies often either a) have insurance within their home country b) do not have liability insurance at all. See more here.
  • The Potential Liability Risk of an Acquisition – A case for Extended Reporting Provision policy – the acquisition of a business should be a positive time for a Buyer and a Seller, however a common misunderstanding can lead to a short-fall 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.
  • How the Media Can Affect Insurance Premiums – Dietary Supplements can always be abused, however the fact the majority of supplements are ingestible make the claim of potential harm something alarming and real to the public. The media and public figures know that and often can create a panic by saturation coverage on certain products and ingredients. The best way to protect your company is to have a smart policy and to get involved in the industry. See more here.

 

Problem Solving Team

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Do you have a question about a service? Perhaps you have a unique challenge? Maybe you need support in an area that isn’t listed here?

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