When clients ask me about insurance, my response is that they should not look at insurance as a separate issue but rather as part of an overall risk management program for their company. A risk management program encompasses several things. The idea is to minimize your company’s exposure to lawsuits, regulatory investigations and other distractions that can not only cost you time and money but, if serious enough, sink your company and everything you have worked for.

In addition to insurance, one needs to look at several factors to manage risk. Included among those factors:

• Do your independent reps have auto insurance on their vehicles?
• Have your claims on your labels and advertising gone through legal review?
• Do you have a written AER policy and are you following it?
• Are you managing and adhering to good manufacturing practices and are you checking to make sure your manufacturers and raw material suppliers or doing so as well?
• Have you trained your customer service representatives on how to properly respond to inquiries and do you have a written policy on how to handle emergency types of calls?
• Do you know what to do when FDA shows up for an inspection at your offices?

All of these are part of your risk management program. And questions like these are asked by insurance underwriters … how you answer them may affect your rates.

As to insurance, there are many different types of insurance available, ranging from automobile insurance for company vehicles (check out Allstate insurance reviews), to insurance to protect directors and officers of the company, to cyber insurance in case your computer systems are compromised, to general liability insurance in case someone claims they suffered a physical injury from consuming your product. All or some of these may be included in your risk management program.

One type of insurance that I have always wished was available was a policy that would cover at least defense costs for Prop 65 cases in California and false advertising class action lawsuits. The reason is that there are very few personal injury claims filed against sports nutrition companies, but there are these other claims and they can be expensive to defend. Well, help (albeit probably expensive help) may be on the way. I am aware of a potential new insurance policy that will cover claims made as a result of Prop 65 cases in California and class action lawsuits across the country. I have seen the draft policy but am still awaiting some clarification as to what the policy actually covers and what the pricing will be. Stay tuned. We will keep you informed.

In the meantime, like a yearly physical it is always a good idea to do an annual risk management check-up. It is always better to be prepared and operate properly than to file that claim with your insurance company.