A unique liability insurance policy packaged by experts in the dietary supplement and herbal industries was only just rolled out at the Nutrition Business Journal Summit Conference in Dana Point, CA.
Although at first focusing on the dietary supplement/herbal product industries, the coverage can apply to any business.
Of unique significance is coverage for Proposition 65 lawsuits, which have proliferated in California.
Companies are experiencing the sting of "bounty hunter" lawsuits including civil actions by various state or local authorities.
False Advertising Insurance Before this policy was announced, there was no coverage obtainable for "false advertising.
" Sadly most people figure they have such insurance under the "Personal and Advertising Injury" division of their commercial general liability policy.
The truth, commonly uncovered after a lawsuit for false advertising comes in the door, is that a standard commercial liability policy contains absolutely no insurance for allegations of false advertising.
With the announcement of this recent policy, coverage is now purchasable.
The new policy particularly defines what constitutes "false advertising" which will prompt the coverage.
Proposition 65 Coverage Again, heretofore there has not been any insurance coverage obtainable for the financial consequences of enforcement of the provisions of California's Proposition 65.
As a practical matter, allegations of high levels of lead have been the biggest single trigger of litigation, which can be initiated by public enforcers like state or local district attorneys or independent plaintiffs suing "in the public interest.
" Experts have said that there are perhaps thousands of goods sold in California with lead levels more than the legal threshold, and without the proper warning labeling mandatory on the packaging of such products.
Companies selling these goods without appropriate analytical testing or the warning are "at risk" according to Frank Jaksch, President of ChromaDex, an Irvine, CA-based testing laboratory http://www.
chromadex.
com.
Standard Proposition 65 settlement costs, which some have labeled as "legalized extortion," include defense costs, plaintiff's attorney costs, civil penalties, and payments in lieu of civil penalties.
According to numbers gathered by a leading trade association the average Prop 65 settlement cost, including attorney fees, exceeds $100,000.
Availability of Coverage and Limitations The Prop 65/false advertising insurance is an extension of coverage under one of the policy modules called Content Liability for Media Companies and Advertisers.
This module provides broad coverage for perils arising out of creating and distributing content for all forms of communications including print, digital and audio media.
Companies that seriously utilize diverse media to advertise might by now have this type of coverage.
The Prop 65/false advertising insurance is an extension of coverage underneath this module and can not be purchased on a standalone basis.
The insurer is initially limiting two elements of Prop 65 settlements, civil penalties and/or payments in lieu of civil penalties, to a $100,000 maximum sub-limit of insurance, which may be negotiable and amplified under specific terms.
The new policy also contains a module for insuring first-party and third-party costs arising out of a breach of data security, plus notification costs, data restoration, crisis management, credit monitoring, cyber investigation, cyber extortion, and civil fines and penalties.
Although at first focusing on the dietary supplement/herbal product industries, the coverage can apply to any business.
Of unique significance is coverage for Proposition 65 lawsuits, which have proliferated in California.
Companies are experiencing the sting of "bounty hunter" lawsuits including civil actions by various state or local authorities.
False Advertising Insurance Before this policy was announced, there was no coverage obtainable for "false advertising.
" Sadly most people figure they have such insurance under the "Personal and Advertising Injury" division of their commercial general liability policy.
The truth, commonly uncovered after a lawsuit for false advertising comes in the door, is that a standard commercial liability policy contains absolutely no insurance for allegations of false advertising.
With the announcement of this recent policy, coverage is now purchasable.
The new policy particularly defines what constitutes "false advertising" which will prompt the coverage.
Proposition 65 Coverage Again, heretofore there has not been any insurance coverage obtainable for the financial consequences of enforcement of the provisions of California's Proposition 65.
As a practical matter, allegations of high levels of lead have been the biggest single trigger of litigation, which can be initiated by public enforcers like state or local district attorneys or independent plaintiffs suing "in the public interest.
" Experts have said that there are perhaps thousands of goods sold in California with lead levels more than the legal threshold, and without the proper warning labeling mandatory on the packaging of such products.
Companies selling these goods without appropriate analytical testing or the warning are "at risk" according to Frank Jaksch, President of ChromaDex, an Irvine, CA-based testing laboratory http://www.
chromadex.
com.
Standard Proposition 65 settlement costs, which some have labeled as "legalized extortion," include defense costs, plaintiff's attorney costs, civil penalties, and payments in lieu of civil penalties.
According to numbers gathered by a leading trade association the average Prop 65 settlement cost, including attorney fees, exceeds $100,000.
Availability of Coverage and Limitations The Prop 65/false advertising insurance is an extension of coverage under one of the policy modules called Content Liability for Media Companies and Advertisers.
This module provides broad coverage for perils arising out of creating and distributing content for all forms of communications including print, digital and audio media.
Companies that seriously utilize diverse media to advertise might by now have this type of coverage.
The Prop 65/false advertising insurance is an extension of coverage underneath this module and can not be purchased on a standalone basis.
The insurer is initially limiting two elements of Prop 65 settlements, civil penalties and/or payments in lieu of civil penalties, to a $100,000 maximum sub-limit of insurance, which may be negotiable and amplified under specific terms.
The new policy also contains a module for insuring first-party and third-party costs arising out of a breach of data security, plus notification costs, data restoration, crisis management, credit monitoring, cyber investigation, cyber extortion, and civil fines and penalties.
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