Companies that manufacture or sell private-label dietary supplements need general liability insurance covering the types of product liability risk they incur.
Any vitamin or nutritional supplement manufacturer, importer, distributor, or wholesaler should be working with an insurance broker who is experienced in the dietary supplement industry. Businesses in this industry are faced with product liability risks that can be significant.
Insurance for Dietary Supplement Companies
Although the dietary supplement industry has made gains in its safety track record over the past ten years, it still faces product liability risks due to subpar manufacturing and inspection practices in some facilities.
According to the FDA’s Division of Dietary Supplement Program, about one-half of the 450 dietary supplement firms inspected had violations of manufacturing rules. These include non-compliance with some of the most basic manufacturing standards, including verifying the product’s ingredients, inspections, and unsanitary facilities.
In fact, some of the manufacturing facilities did not have master manufacturing records or recipes for the products they were making. Some supplements in the marketplace can even contain substances in the products undisclosed on the product labels. For these reasons and more, anyone doing business in the industry needs dietary supplement insurance.
Types of Coverage for Companies Doing Business in the Dietary Supplement Industry
Dietary supplement insurance is available to cover the unique risks that a business faces, with coverage limits and customized policies to fit a business’s specific needs. The type of coverages most commonly needed by any company in the dietary supplement industry include:
Commercial General Liability
Commercial general liability insurance is the most basic coverage that all companies need, regardless of their industry. It is required by state law as a condition to obtaining a business license and doing business in the state.
State laws may also mandate coverage minimums based on factors such as the size of the company and the nature of its business. General liability provides the company with general overall insurance that covers the company for claims arising from a range of incidents.
For companies in the dietary supplement industry, a good general liability policy can provide it with basic protection against liability resulting from dangerous products, contaminated products, labels that are inaccurate or fail to warn, and from many other activities that pose product liability risks to any business.
The best general liability policy will cover as many risks to the business as possible. For risks not covered by the general liability policy, a business can cover itself by acquiring additional policies to protect against those specific risks, provided that the risks are insurable.
Under a general liability policy, the company will also be insured for:
- Premises.
- The cost of defense from lawsuits (even frivolous, fraudulent, and/or groundless) is often more important than the liability portion itself.
- Covered injury claims when negligence on the insured’s part can be proven.
Additional Product Liability Coverage
Although product liability coverage is usually acquired as part of the company’s general liability coverage, a company can acquire stand-alone or additional product liability insurance. Coverage for the insured premises is also included.
In addition, a general liability policy provides coverage for defense from lawsuits (even those that are frivolous, fraudulent, and/or groundless), and payout covered injury claims when negligence on the insured’s part can be proven. Paying legal defense costs is often an overlooked aspect of the policy, and this feature can often be more important than the liability portion itself.
Without adequate products liability coverage, a dietary supplement company could be required to pay the expenses and any damages out of its own resources.
It is not unusual for companies in products liability litigation to have over 70 percent of the amount of their insurance claims consist of legal and investigation expenses associated with the claim.
Those companies should never underestimate the cost of defending products liability lawsuits.
Product liability insurance will protect the company against aggressive litigation tactics by plaintiffs and will protect the company from the costs of its defense and any payouts on a claim.
Adequate product liability coverage should also protect a dietary supplement company from:
- Adverse side effects.
- Allergic reactions.
- Interfering with over-the-counter or prescription drugs, resulting in injuries or create complications for the consumer.
- Injuries or damage resulting from the company’s negligence.
For More Information about Dietary Supplement Insurance, Contact the Insurance Experts at Southern States Insurance
When it comes to insurance for any person or company doing business in the dietary supplement industry, having the right coverage and the right amounts can determine whether the company has the financial resources to withstand a significant product liability claim.
If you are one of those businesses, get help from our insurance specialists at Southern States Insurance. Their experience with insuring risks in the dietary supplement industry can be invaluable to the financial wellbeing of your business, no matter which part of the dietary supplement industry you are in.