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August 25, 2011
LOS ANGELESGreg Doherty, dietary supplement practice leader at Poms & Associates Insurance Brokers, said the company has received greater interest from the nutraceutical industry following moves by BodyBuilding.com to seek Prop 65 protection from its suppliers. According to Doherty, the online retailer is asking suppliers to certify in writing that their products are Prop 65 compliant, or use the appropriate warning label; companies with fewer than 10 employees are exempt from Prop 65 requirements.
Doherty said regular product liability insurance may not cover Prop 65 lawsuits. However, he added, within the past 60 days an insurance product covering Prop 65 claims has indeed been introduced, and companies doing business with BB.com may want to back up their certification with liability insurance, as opposed to just their signature on a certification."
He stated, Prop 65 claims are covered under a broader umbrella clause called false advertising coverage, which before now has not been available at all. The new policy specifically defines what constitutes false advertising, which will trigger the coverage."
Typical Prop 65 settlement costs include defense costs, plaintiffs attorney costs, civil penalties and payments in lieu of civil penalties. According to statistics gathered by a leading trade association, the average Prop 65 settlement cost, including attorney fees, exceeds $100,000.
BB.com has raised the bar as far as initiating a process to insulate themselves from the costs of Prop 65 actions," Doherty said. Companies with their own branded products and selling those products in Californiathe real targets of Prop 65 lawsuitsshould at least take a look at this new insurance."
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