Supplement Product Liability Insurance - What do I actually need?

[Paul Thomas]

I'm starting out on my fastlane path very soon. I've determined the niche I want to go in, and how I'm going to serve it. There is only a handful of manufacturers that will create the blend I want without requiring MOQ of 1,000+ (I'm just starting out with semi-limited funding).

There is a particular manufacturer that I'd really like to use, I've spoken to them on the phone and asked numerous questions, done my research and they are 1) reputable 2) seem like good people 3) have good products. The one issue I see is that they don't provide "umbrella insurance" to you since they aren't a massive institutional manufacturer. I'm going to call them in several hours to be sure but when I first spoke to them they said we provide "Certificate of Manufacture", and "Add on Insurance (or something of that notion)", but you would "need your own policy".

I know insurance is very important with consumables so have a couple questions:

1) This is my first venture and I don't have an LLC/S-Corp registered yet because I haven't sold anything and plan to sell on Amazon - should I do this first given the nature of the product?
2) Does the above sound like I need to get my own product liability insurance, or would it be best to scavenge for new suppliers that will get me under their plan?

Thanks!

 

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[MJ DeMarco]

Hypothetical question...

You don't get insurance.
You sell your products on Amazon and someone is killed or injured.
They blame your product and want to sue you and the manufacturer for $10M.

Would that be the right time to get an LLC and insurance?

 

[benhebert]

Do you really want to use a "good people" manufacturer that doesn't take their business serious enough to carry insurance?

 

[Paul Thomas]

Thanks guys and fully understand the importance of having insurance. I guess the better way to word my concern is what do I actually need to cover myself in a small scale supplement business. Ie. What are options that manufacturers can offer that will be sufficient, and what is not sufficient. Probably a bit of a complex question to cover via a forum post.

Edit: And I will definitely be registering an LLC before selling product.

 

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[TTG SS]

I am surprised any state side manufacturer would even consider selling to you if you aren't legally a business

 

[mikey3times]

I can't answer your specific questions, nobody here can. Find a lawyer or insurance expert. Trust me, you don't want to mess around.

Make sure you check out this thread:
https://www.thefastlaneforum.com/community/threads/supplement-entrepreneurs-exercise-caution.65725/

PS: not trying to dissuade anyone from supplements. Just trying to make sure you are protected. That Frontline episode is wicked scary.

 

[MJ DeMarco]

what do I actually need to cover myself in a small scale supplement business. Ie. What are options that manufacturers can offer that will be sufficient, and what is not sufficient.

Are you listening to yourself?

Again, if you kill someone do you think the attorney representing the victim GIVES A FLYING F*CK YOU ARE A 'SMALL SCALE SUPPLEMENT BUSINESS?'

Attorney: You killed a family member of my client. We are going to sue you for $10 million.
You: I'm just a small-scale supplement business.
Attorney: Oh, I didn't know that. OK, we will drop the lawsuit.

In my non-professional, non-lawyer opinion, a wronged party will not just go after the manufacturer, they will go after YOU. I can't see in anyway how a manufacturer's policy will bleed over to cover your negligence unless you receive an "additional insured" certificate from the manu.

People, for the love of God, stop with the freaking shortcuts. Do it right or don't do it at all.

** THE ABOVE REPRESENTS AN HYPOTHETICAL OPINION and SHOULD NOT BE CONSTRUED AS LEGAL ADVICE.

 

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[MJ DeMarco]

I've recommended this resource for business insurance before...

BizInsure.com -- and within 15 seconds of visiting, they have a category for "home-based supplement businesses."

 

[Paul Thomas]

I've recommended this resource for business insurance before...

BizInsure.com -- and within 15 seconds of visiting, they have a category for "home-based supplement businesses."

This is great, thank you!!

To be clear also, I wasn't trying to downplay the importance of insurance I just wasn't sure if there different types of coverage needed for different scale businesses - but this website should answer that, thanks! Also, "unless you receive an "additional insured" certificate from the manu." is the information I needed so that I can call various manufacturers and screen them with this requirement.

 

[MJ DeMarco]

Also, "unless you receive an "additional insured" certificate from the manu." is the information I needed so that I can call various manufacturers and screen them with this requirement.

This is my guess and an opinion. I don't even know if manufacturers even provide such things to their clients. I'm not an attorney so don't be so willingly accepting of my opinions as facts and/or actual legal recommendations. They are NOT. My point is, this is not something to "think about later."

 

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[Remnant]

Are you listening to yourself?

Again, if you kill someone do you think the attorney representing the victim GIVES A FLYING F*CK YOU ARE A 'SMALL SCALE SUPPLEMENT BUSINESS?'

Attorney: You killed a family member of my client. We are going to sue you for $10 million.
You: I'm just a small-scale supplement business.
Attorney: Oh, I didn't know that. OK, we will drop the lawsuit.

In my non-professional, non-lawyer opinion, a wronged party will not just go after the manufacturer, they will go after YOU. I can't see in anyway how a manufacturer's policy will bleed over to cover your negligence unless you receive an "additional insured" certificate from the manu.

People, for the love of God, stop with the freaking shortcuts. Do it right or don't do it at all.

** THE ABOVE REPRESENTS AN HYPOTHETICAL OPINION and SHOULD NOT BE CONSTRUED AS LEGAL ADVICE.

keeping us new guys honest -- brutal honesty appreciated.