AHPA responds to Prop 65 threat with new liability insurance program

20-Jul-2011 - Last updated on 21-Jul-2011 at 14:00 GMT

The American Herbal Products Association (AHPA) is offering the dietary supplements industry a new liability insurance program that for the first time responds to California Proposition 65 claims.

The insurance – known as the ThinkRisk Vitamin & Supplement Program and available through Grifcon Enterprises – also provides coverage for false advertising and other similar claims, including labeling claims, said AHPA.

The program also provides coverage for media and intellectual property claims, such as trademark and copyright infringement, as well as for the consequences of a breach of data security.

"AHPA worked very closely with ThinkRisk and Grifcon Enterprises on the Proposition 65 component of this program to develop a comprehensive and important offering of risk coverage that has not been previously available to dietary supplement companies," said Michael McGuffin, AHPA president.

"In light of the highly expensive litigation costs that we've seen for companies to respond to Proposition 65 claims – often exceeding $100,000 per settlement – this new V&S Program is a prudent form of protection."

Prop 65

Introduced in 1986, prop 65 requires manufacturers selling products in California to give warnings if their products expose consumers to any detectable amount of 800+ chemicals believed to cause cancer or reproductive toxicity.

While the legislation is not new, it has recently moved up the priority list for many firms in the supplements sector after it has found itself at the receiving end of a tidal wave of prop 65 notices, the majority of which were filed by San Diego-based group the Environmental Research Center.

Coverage

The specifics of the program include:

Claims brought under California's Proposition 65, including defense expenses; attorneys' fees; and civil penalties, but only up to a specified sublimit, typically $100,000.
All forms of advertising, including websites, print and broadcast advertising, product labeling, email, blogs, and social networks; media and intellectual property perils such as trademark and copyright infringement, and defamation; false advertising, misleading labeling or other unfair or deceptive trade practices.
First-party and third-party costs arising out of a breach of data security, including notification costs, data restoration, crisis management, credit monitoring, cyber investigation, cyber extortion, and civil fines and penalties

For more information please visit the Grifcon Enterprises website.