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Friday 23 November 2012

Brand New Liability Insurance Covers CA Prop 65 and False Advertising Claims


A unique liability insurance policy put together by experts in the dietary supplement and herbal industries was recently rolled out at the Nutrition Business Journal Summit Conference in Dana Point, CA. Although initially focusing on the dietary supplement/herbal product industries, the coverage can apply to any business. Of particular significance is coverage for Proposition 65 lawsuits, which have proliferated in California. Companies are experiencing the hurt 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 to be had 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, typically discovered following 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, insurance is now obtainable. The new policy particularly defines what constitutes “false advertising” which will trigger the coverage.

Proposition 65 Coverage

Again, heretofore there has not been any insurance coverage around 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 largest single cause of litigation, which could be initiated by public enforcers such as state or local district attorneys or private plaintiffs suing “in the public interest.” Experts have said that there are perhaps thousands of merchandise sold in California with lead levels exceeding the legal threshold, and without the proper warning labeling mandatory on the packaging of such products. Companies selling these products without appropriate analytical testing or the warning are “at risk” according to Frank Jaksch, President of ChromaDex

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