By Chris Morey, Bolton & Company07.18.22
Brick-and-mortar vitamin, supplement, and sports nutrition retail stores have unique needs when it comes to insuring their business properly, and there is a lot of gray area floating around the industry. From single locations up to chains of 20+ stores, I have been able to uncover some coverage gaps that are often overlooked.
Below are a couple of questions along with my comments that are relevant to this sector of the dietary supplement industry.
Question: I have a Business Owners Policy (BOP) in place but am I protected when it comes to my business’ liability?
Answer: Yes and, potentially, no. There are two primary components to the liability piece of a BOP: General Liability and Products/Completed Operations Liability.
If a customer were to come into your store and slip on your floor resulting in bodily injury, the General Liability coverage within the policy would be used. In simple terms, this is “Slip/Trip/and Fall” liability coverage.
Now if a customer purchases a product off your shelves (let’s say a pre-workout), goes to the gym, and suffers a heart attack (i.e., bodily injury), this is where the Products/Completed Operations Liability comes in. Your business will more than likely get looped into a lawsuit and it is crucial you have Products/Completed Operations Liability to defend you in this case.
Make sure your BOP does not exclude or limit coverage for Products/Completed Operations in any way, shape, or form.
In today’s insurance marketplace, many insurance carriers will not provide coverage for Product Liability for retail stores. In fact, they often specifically exclude Product Liability on the BOP policies when underwriting a vitamin/supplement retail business.
Question: I checked my Business Owners Policy and it shows I have coverage for Products/Completed Operations Liability. I’ll be protected, right?
Answer: Again, yes, and potentially no. Some additional questions to ask include:
How is your business classified on the policy? “Health or Natural Food Store” or “Vitamin Store?” If the classification of your business on the policy does not match up to your true business operations, this may be a reason for the carrier to decline coverage in the event of a claim.
Do you sell any products that are under your own brand/label? If so, and I were to go talk to your carrier as if we were quoting your business for the first time, they would more than likely decline to quote because insurance carriers providing BOPs do not like to insure vitamins/supplements under the name or label of your business. They will exclude Product Liability. This is a key discussion as retail store owners are now getting into the business of manufacturing.
Do you sell CBD products? Let’s be honest, it’s a hot commodity; but similar to the above, if I were to go back to the carrier as if we were quoting your business for the first time, they would decline in a heartbeat. Until there is unanimous legality across all applicable legal bodies, the carriers providing BOPs will be unwilling to insure companies selling CBD products.
As you can see, there are a few questions that lead to some gray areas when determining if you are properly protected.
So what is the most effective insurance structure to help eliminate the “gray area” that a BOP may leave your store with? To be transparent, this structure will not be any cheaper than your current BOP policy, and it will involve purchasing two separate policies, outlined below:
1. Business Owners Policy (BOP) that Excludes Product Liability but has your business classified properly and clearly (i.e., Vitamin/Supplement Retail Store vs. Health/Natural Food Store). There are many insurance carriers that will happily insure your business with a BOP while excluding coverage for Product Liability. Their BOP policies are robust and contain many coverage enhancements for both property and liability all while remaining very, very affordable.
2. Product Liability Policy: This policy would fill in the “gap” where the BOP excludes coverage for product liability. My focus on the supplement industry has allowed me to build relationships with carriers that will clearly, hands down, provide product liability coverage for products you sell—supplements of others, supplements under your own label, products with CBD or CBD tinctures, and so on. There is no gray area with these carriers that are well educated on the supplement industry.
If you have any questions on whether your retail business has adequate coverage, or if you are looking to eliminate the gray areas mentioned above, please contact me and I will be happy to assist your company.
About the Author: Chris Morey is associate vice president at Bolton & Company. He is a Certified Sports Nutritionist who focuses on the needs of clients within Bolton’s Dietary Supplement Practice Group. With more than seven years of customer service experience, Morey looks to find the right insurance solutions for his clients in the Health and Fitness industries. With a substantial focus on the supplement industry and all parts of the supply chain, he also strives to serve the hemp and CBD product space as the insurance industry continues to fluctuate and evolve. Prior to joining Bolton in 2015, Morey worked for Nutrishop USA. He holds a Bachelors of Arts in Business Administration from Azusa Pacific University. He can be contacted at cmorey@boltonco.com.
Below are a couple of questions along with my comments that are relevant to this sector of the dietary supplement industry.
Question: I have a Business Owners Policy (BOP) in place but am I protected when it comes to my business’ liability?
Answer: Yes and, potentially, no. There are two primary components to the liability piece of a BOP: General Liability and Products/Completed Operations Liability.
If a customer were to come into your store and slip on your floor resulting in bodily injury, the General Liability coverage within the policy would be used. In simple terms, this is “Slip/Trip/and Fall” liability coverage.
Now if a customer purchases a product off your shelves (let’s say a pre-workout), goes to the gym, and suffers a heart attack (i.e., bodily injury), this is where the Products/Completed Operations Liability comes in. Your business will more than likely get looped into a lawsuit and it is crucial you have Products/Completed Operations Liability to defend you in this case.
Make sure your BOP does not exclude or limit coverage for Products/Completed Operations in any way, shape, or form.
In today’s insurance marketplace, many insurance carriers will not provide coverage for Product Liability for retail stores. In fact, they often specifically exclude Product Liability on the BOP policies when underwriting a vitamin/supplement retail business.
Question: I checked my Business Owners Policy and it shows I have coverage for Products/Completed Operations Liability. I’ll be protected, right?
Answer: Again, yes, and potentially no. Some additional questions to ask include:
How is your business classified on the policy? “Health or Natural Food Store” or “Vitamin Store?” If the classification of your business on the policy does not match up to your true business operations, this may be a reason for the carrier to decline coverage in the event of a claim.
Do you sell any products that are under your own brand/label? If so, and I were to go talk to your carrier as if we were quoting your business for the first time, they would more than likely decline to quote because insurance carriers providing BOPs do not like to insure vitamins/supplements under the name or label of your business. They will exclude Product Liability. This is a key discussion as retail store owners are now getting into the business of manufacturing.
Do you sell CBD products? Let’s be honest, it’s a hot commodity; but similar to the above, if I were to go back to the carrier as if we were quoting your business for the first time, they would decline in a heartbeat. Until there is unanimous legality across all applicable legal bodies, the carriers providing BOPs will be unwilling to insure companies selling CBD products.
As you can see, there are a few questions that lead to some gray areas when determining if you are properly protected.
So what is the most effective insurance structure to help eliminate the “gray area” that a BOP may leave your store with? To be transparent, this structure will not be any cheaper than your current BOP policy, and it will involve purchasing two separate policies, outlined below:
1. Business Owners Policy (BOP) that Excludes Product Liability but has your business classified properly and clearly (i.e., Vitamin/Supplement Retail Store vs. Health/Natural Food Store). There are many insurance carriers that will happily insure your business with a BOP while excluding coverage for Product Liability. Their BOP policies are robust and contain many coverage enhancements for both property and liability all while remaining very, very affordable.
2. Product Liability Policy: This policy would fill in the “gap” where the BOP excludes coverage for product liability. My focus on the supplement industry has allowed me to build relationships with carriers that will clearly, hands down, provide product liability coverage for products you sell—supplements of others, supplements under your own label, products with CBD or CBD tinctures, and so on. There is no gray area with these carriers that are well educated on the supplement industry.
If you have any questions on whether your retail business has adequate coverage, or if you are looking to eliminate the gray areas mentioned above, please contact me and I will be happy to assist your company.
About the Author: Chris Morey is associate vice president at Bolton & Company. He is a Certified Sports Nutritionist who focuses on the needs of clients within Bolton’s Dietary Supplement Practice Group. With more than seven years of customer service experience, Morey looks to find the right insurance solutions for his clients in the Health and Fitness industries. With a substantial focus on the supplement industry and all parts of the supply chain, he also strives to serve the hemp and CBD product space as the insurance industry continues to fluctuate and evolve. Prior to joining Bolton in 2015, Morey worked for Nutrishop USA. He holds a Bachelors of Arts in Business Administration from Azusa Pacific University. He can be contacted at cmorey@boltonco.com.
