Do I Need Product Liability Insurance For My Brand?

by Christine Hronec

Each year, hundreds, if not thousands of new dietary supplements come to market. The Nutraceutical industry’s point of sale varies from e-commerce, mass retail, c-stores, television, gyms, personal training studios, doctor’s offices, med spa’s and many more. In order to be properly protected from claims and law suits, product liability insurance is a necessity. This applies to any business or individual that manufactures a product even if the manufacturing is contracted out to a third party operation (including overseas operations). Simply put, anyone that is responsible for the design, manufacture, sale, or distribution of an end user product is liable for any adverse events associated with the end use of the product.

The nutraceutical industry is a uniquely positioned market place where the products do not require pre-market approval by the Food and Drug Administration as the products are not intended to diagnose, treat, cure, or prevent any disease. While dietary supplements are not classified as drugs according to the FDA’s definition, their health benefits are well established and recognized as beneficial for overall health, weight loss, strength building, endurance, and recovery. However, even though product liability insurance is relatively straight forward to obtain, one should be cautioned that not all ingredients are covered by insurance carriers due to insufficient safety data. There is no standardized ingredient exclusion list, however the most commonly excluded ingredients in the dietary supplement industry include: ephedra, DMAA, yohimbe, bitter orange, androstenedione, etc.

A careful regulatory review of all products in one’s product line is highly recommended to ensure regulatory compliance. Once it has been determined that all the products can safely be covered, obtaining product liability insurance can be as simple as setting up a policy with an acclaimed insurance carrier for the minimum requirements of your largest distributor/customer for your brand. If the brand is contracted out, it is often quite simple to pay a yearly fee to a contact manufacturer to be added to their umbrella policy if they cover all your manufacturing services. Contact immediately if you are in need of coverage, and ingredient review, and/or coverage limits.

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