loader

Blog

CBD Insurance Provides Product Liability Protection for Cannabidiol Businesses

Mar 15, 2022

CBD Insurance

CBD Insurance Provides Product Liability Protection for Cannabidiol Businesses

The popularity of cannabidiol (CBD) products continues to increase as more consumers appreciate the potential health and wellness benefits. In 2020, the global CBD market was worth $2.8 billion and was projected to grow at a compound annual rate of 21.2% from 2021 to 2028. However, those looking to succeed in the CBD business must confront an unfortunate reality: the complex and confusing legal environment. These entrepreneurs should invest in liability insurance for CBD companies to protect their bottom line. Here’s an in-depth look into CBD product liability insurance

The FDA Warns Against CBD Health Claims

Your first line of defense against CBD liability litigation is avoiding making false health claims about your products. As per the U.S. Food and Drug Administration (FDA), you can’t promise consumers that your CBD offerings can treat, mitigate, prevent, or cure medical disorders like cancer or Parkinson’s disease.

Why Do You Need CBD Insurance for Product Liability Claims?

There’s a lot of confusion over the legal status of CBD products derived from hemp. Unlike marijuana, the hemp plant is an agricultural crop rather than a controlled substance as per federal law. Since states are also regulating CBD, there might be gray areas impacting critical aspects of cannabidiol businesses in your location. You need liability insurance along with expert insurance advice, just in case!

More: What Are the Insurable CBD Products?

Understanding CBD Product Liability

CBD product liability insurance is a policy that protects your business when a consumer claims that your products harmed them. It’s generally an important component of cannabis manufacturing insurance. You also need this liability protection if you supply or produce CBD/hemp products.

The Most Common CBD Product Liability Claims

  • CBD ingestibles are illegal. You could be held liable if you sold CBD-infused drinks or food that triggered adverse health reactions.
  • Topical CBD products that may cause adverse reactions on the skin are a potential liability.
  • Making medical claims about CBD solutions could land your business in legal trouble and attract FDA penalties.
  • A legal dispute can arise if your hemp-based CBD is mistaken for a marijuana derivative, which is illegal in all states.

Crucial CBD Insurance Services

Insuring your hemp cannabidiol business can help in ways such as:

  • Risk management to minimize CBD liability lawsuit exposure
  • Pays compensatory damages/settlements to harmed CBD users
  • Covers attorney fees to defend your business in CBD liability lawsuits
  • CBD insurance can cover worker’s compensation due to workplace injury

Types of CBD Insurance

There are two main types of insurance for CBD companies. These are:

  • Product liability: This cover can pay for damages in various scenarios. An example is when a consumer suffers after relying on unsubstantiated medical claims made about using your CBD products.
  • General liability: You’ll need this insurance for protection against liabilities like advertising injury, defamation, or third-party injuries on your business premises.

If you deal in or advertise cannabidiol online or offline, you’re in a high-risk business. However, you can operate profitably by leveraging CBD insurance services with GrayStone Insurance Group. Contact us today for a customized CBD product liability policy!