Supplement Liability Insurance: How Much You Need (and Why Your Manufacturer’s Policy Isn’t Enough)

Thinking about insurance usually happens right before a retail pitch, an Amazon ramp, or your first big PO. Smart—but the choices you make now can save you money, speed approvals, and protect your brand when something goes sideways.

Key takeaways

• Aim for ~$5M total limits across product liability, product recall, and (ideally) inventory/contamination—then tune with your broker based on channels and scale.

• Three application areas drive approval and price: (1) projected sales, (2) your actual manufacturer’s GMP/testing/recall controls, and (3) ingredients that are excluded or high-risk.

• Don’t rely on your manufacturer’s policy. Keep your own coverage for claim control, portability, and to avoid conflicts of interest.

• Tighten your testing plan, recall plan, and labeling/claims before you apply—underwriters notice.

What underwriters really care about (and where founders slip)

1) Projected sales (exposure)

Premiums scale with volume and channel mix. If you’re pre-launch, use a good-faith forecast from your plan and update mid-term once actuals diverge.

Pro tip: Break out DTC, Amazon/marketplaces, and retail. Retail often triggers higher required limits and “additional insured” requests.

2) Your actual manufacturing facility (not a broker)

Expect questions about:

• GMP compliance and recent third-party audits

• Incoming/in-process/finished-product testing (show an example COA)

• A written recall plan and your lot traceability

Have the facility name and address, a current GMP/audit letter, example batch release/COAs, and a recall SOP summary handy.

3) Ingredients that impact coverage

Carriers routinely exclude steroids, “chemical yohimbe,” and anything FDA designates a Class I health hazard. Grey-area or novel ingredients can mean a decline or large deductible.

Work smart: Draft the entire label (Supplement Facts + claims) first, then do a regulatory review so you’re not insuring an uninsurable formula.

How much insurance is “enough”?

A practical starting point for supplement brands is ~$5M total (aggregate), typically built from:

• Commercial General Liability + Product Liability

• Product Recall (often a sublimit—confirm the dollar amount)

• Inventory Loss/Contamination (first-party; optional but valuable)

Discuss with your broker:

• Per-occurrence vs aggregate limits

• Recall coverage details (investigation, disposal, PR/crisis)

• Deductibles/self-insured retentions you can actually carry

• Territory/jurisdiction if you sell outside the U.S.

• Additional insured endorsements for retailers/fulfillment partners

And for personal protection: incorporate (LLC/C-Corp) so the business—not you—holds the liability. (This isn’t legal advice.)

Why your manufacturer’s policy isn’t enough

It’s convenient to be “added to their policy,” but there are real downsides:

• Conflict of interest: Their adjuster protects their balance sheet first.

• Claim control: Limited visibility into defense and settlement strategy.

• Portability risk: If you switch co-mans, coverage history gets messy while product remains in the market.

• Coverage gaps: Their exclusions/limits weren’t designed around your risk profile.

• COIs aren’t coverage: A certificate simply proves a policy exists.

Best practice: Maintain your own policy and, if needed for a project, exchange mutual additional insured status.

Pre-application checklist (speeds approval & can lower premiums)

• Revenue forecast by channel (update quarterly)

• Facility name/address + latest GMP/audit letter

• Documented testing plan (incoming + finished product); example COAs

• Recall plan with key contacts and decision tree

• Regulatory/claims review of all labels and marketing

• Adverse event intake process (email/phone + required questions)

• Entity set up (LLC/C-Corp) and basic supplier agreements

FAQs

What if I don’t know first-year revenue?
Use your best estimate. Most carriers allow mid-term endorsements when actuals change.

Difference between product liability and product recall?
Liability covers third-party bodily injury/property damage. Recall covers your costs to pull/replace affected goods (often with a sublimit).

Will international sales be covered?
Only if your policy says so. Tell your broker exactly where you sell/ship.

How do I reduce premiums without cutting corners?
Demonstrate GMP, a clear test plan, clean claims/labels, and a working recall plan. Underwriters reward process.

Summary

You need coverage sized to your exposure and control over claims—which means carrying your own policy. Underwriters say yes faster (and cheaper) when you can show GMP documentation, a real testing program, and clean, compliant labels. Start around $5M total limits, then calibrate with your broker.

Next steps

• Book a Signature Consultation
  A focused working session to triage your top risks (e.g., test plan, recall readiness, formula/claims insurability) and map practical next steps to take after the call.
  Designed for founders who want clarity before placing POs, applying for insurance, or pitching retail.

• Join SSET — Supplement Startup Essentials Training
  Our on-demand program that helps founders understand which regulations apply, complete a market/product brief, and learn how to find and vet a co-manufacturer and what early retailers/marketplaces expect.