Public liability insurance warning to UK cosmetic businesses exporting to the USA

Are you sufficiently covered with your existing insurance?

The UK cosmetics market is valued at £9,681m, according to The Cosmetic, Toiletry and Perfumery Association and the beauty industry employs over a million people If you manufacture or sell cosmetic products, it is essential you have the correct and relevant insurance cover in place to protect your business – particularly if exporting to the USA or Canada – which is where we can share our specialist knowledge.

Due to the high-risk nature of certain products and the litigious society in the USA, it is important to consider that each state has different rules, regulations and exposures. For this very reason, both exporters and manufacturers of cosmetic products exported to the USA must have correct level of product liability insurance.

 If you export cosmetics products to the USA or Canada, or sell your products online that go into the USA through Amazon such as Aftershave, Anti-ageing Cream, Hair products, Deodorants, Eye Cream, Eye Liners, Eye Shadow, Foundation, Gel, Lip Balm, Lipstick, Lotion, Makeup, Moisturiser, Nail Varnish, Perfume and Shave Gel, your business will need specialist product liability insurance.

A defective product that causes injury COULD result in a product liability legal claim against either the manufacturer, distributors or importers.

USA Poduct Liability Insurance

Specialist product liability insurance for exporters to the US markets is designed to protect your business as litigation is extremely costly and court awards much higher.

We have access to specialist insurers and can provide tailored Product Liability Insurance advice to business in the Cosmetics sector that export to the USA including online businesses, high-risk products AND  new products.

For suppliers of specialist products that are purchased elsewhere you might be storing products in the UK that require warehousing before your products are shipped or perhaps you sell your products online that go into the USA through Amazon, as such Amazon FBA Insurance is a requirement.

Product Liability

When purchasing product liability insurance you should:

  • Be mindful of the litigious environment in the US and make sure that you have the right insurance cover in place in case of possible lawsuits.
  • Legal action can come from individuals, businesses or class actions where lots of people take action against you or your company because they have suffered from using your product.
  • Make sure you fully understand your exposures when exporting to the USA. (It’s important to remember that the US is made up of 50 states but 51 insurance jurisdictions, each with different rules, regulations and exposures.)
  • Do not assume that a UK policy can just be extended to cover the US. Insurance to cover your liabilities in the USA must be flexible enough to be scalable with your business requirements, buying insurance cover today knowing that sales to the USA or Canada is going to increase soon could cause a problem.
  • Make sure that your limits are high enough. As an example, think of the substantial amount of damages that might be awarded against you in something like a product liability case.
  • The legal system in the USA differs to ours in the UK and usually relies on what is known as ‘Strict Liability’. This means that even if you have only supplied the product you could be deemed liable for any losses that might occur from it.
  • Remember that your duties to customers are often more onerous than in the UK. Try to prevent any possible accusations of ‘failure to warn’ relating to your products.
  • Be aware of the differences in the types of cover available in the USA. Speak to a specialist insurance broker who understand the US export market, giving you peace of mind that you are correctly covered and that any claims will be dealt with by specialists that understand the environment.

We have helped many businesses within the cosmetics sector obtain the right level of insurance cover, including those that carry increased product liability risks. This is where we can provide specialist guidance that ensures you have peace of mind and the correct product liability protection when exporting to North America or Canada.

Talk to a specialist

Whilst there can be many challenges around arranging US export cover, they are certainly not impossible. If you had legal action made against your business or had to make a claim and were incorrectly insured, this would leave you faced with the remaining costs yourself – which could be anything from hundreds, to thousands, to millions of pounds. Talk to one of our experienced insurance specialists today on 01623 889530.