Dietary supplement insurance is available to businesses that participate in the dietary supplement industry. Businesses in this industry must manage many liability risks, particularly product liability risks based on product contamination, bodily injury due to adverse reactions, and lawsuits filed by dissatisfied customers.
Types Of Businesses That Need Dietary Supplement Insurance
According to the Dietary Supplement Health and Education Act of 1994 and regulations issued by the Food and Drug Administration, a dietary supplement is a product that is ingested and may include herbs, minerals, vitamins, amino acids, botanicals, enzymes, organ tissues, metabolites and glandular substances, regardless of whether they are in the form of a tablet, capsule, powder, bar, gelcap or liquid.
Any company that manufactures, packages, labels, or distributes dietary supplements may be held responsible for the safety, identity, purity, and efficacy of their products. This can include companies in the health, nutrition and lifestyle businesses, including manufacturers, distributors, wholesalers, and retail sellers of:
- Herbal products (compounded and non-compounded)
- Energy drinks and bars
- Nutritional supplements
- Protein Supplements
- Bodybuilding Supplements
- Weight Loss Products
This list of companies who need dietary supplement insurance also includes companies that supply the raw materials to dietary supplement companies for their products.
Smaller Dietary Supplement Companies Face The Same Product Liability Risks As Larger Companies
Whether a dietary supplement business is a small, one-person distribution company or a large corporation, a products liability lawsuit can mean the end of that business without adequate insurance coverage.
Many smaller businesses mistakenly believe that they have minimal risk of being sued for a significant amount in damages because they are not well-known. This thinking is simply not correct because people do bring large product liability suits against smaller companies. Yet smaller companies are less able to bear the costs out of pocket than larger companies. Smaller companies do need product liability coverage and perhaps more coverage than they may think.
Costs of Defense Are Significant
The cost of defending a lawsuit against even a meritless product liability claim can spell the end of the business, regardless of who wins or loses the case. With the right liability insurance coverage, the company would not have to pay those costs out of pocket.
Most of the cost of defense in dietary supplement products liability cases consist of legal and investigation expenses. In fact, those expenses make up about 70 percent of the cost of defense.
Having Adequate Liability Insurance Can Discourage Aggressive Plaintiff’s Attorney Tactics
When a plaintiff attorney knows the target company is covered by products liability insurance, that attorney understands that the insurance company will be covering the costs of defense. On the other hand, a company that is not insured is more likely to agree to a favorable settlement to minimize the amounts the company has to pay out of pocket.
Two Ways To Reduce And Manage Product Liability Risks
Companies in the dietary supplement industry can reduce their risks and their premium costs by complying with applicable regulations, as described below:
Comply with the Applicable Standards for Good Manufacturing Practices
The standards for good manufacturing practices were issued by the Food and Drug Administration (FDA) through regulations. Applicable to anyone who manufactures, packages, or holds dietary supplement products, the FDA’s regulations are found at Code of Federal Regulations Title 21, Part 111.
Under the FDA’s standards, for example, ingredients must be adequately tested to ensure the identity, purity, quality, strength, and composition of dietary supplement products. The FDA conducts onsite inspections to verify the company’s compliance.
A company with a record of complying with those standards will not only pay less for its insurance premiums, but the company will also be in a better position to defend itself against product liability claims. Compliance with these standards is mandatory if the company hopes to succeed in the industry.
Dietary supplement companies need to ensure that they comply with federal regulations concerning advertising issued by the Federal Trade Commission (FTC) and those regulations issued by the FTC and FDA concerning labeling products.
A dietary supplement business may be prudent to hire an attorney or other expert to review its labels and marketing claims before taking its their products to the market. In particular, where a product is labeled as “all-natural”, the companies should be aware that those types of claims have been the subject of significant numbers of class action product liability suits. Accusations of false labeling and false marketing claims connected with dietary supplement products are the basis for many class-action lawsuits against the companies. An expert can help a dietary supplement company develop and implement a strategy that minimizes its exposure in such lawsuits.
Contact The Experts At Southern States Insurance For More Information About Dietary Supplement Insurance
If you are in the dietary supplement business, be sure to consult with the insurance professionals at Southern States Insurance to discuss coverage for your company. They offer dietary supplement insurance customized to meet your needs and can provide you with a competitive quote.