Protecting Your CBD Business From Product Liability Lawsuit

Protecting Your CBD Business From Liability Lawsuits

As follows with any new product craze, lawsuits seem to be inevitable. The industry surrounding CBD is no exception. The current trend of CBD-related lawsuits has mostly been claimed about the liability of products. Since no company hopes to find itself being sued, there are a few simple steps you can take to decrease the likelihood of getting hit with such a lawsuit, saving you money in the long run.

What Is a Product Liability Lawsuit?

A product liability lawsuit is a kind of lawsuit that usually involves harm or injury that has been caused by a product that is allegedly defective in one way or another. The most common type of product liability lawsuits are ones that surround false labeling. In this kind of suit, a label may state a certain percentage of CBD is in a product. The consumer can buy it, test it and find out that the true amount of CBD is different. Then, they can sue that seller and claim a false label.

How To Reduce Chances of Product Liability Lawsuits:

Though there are tactics a company can have or not have to minimize the chances of lawsuits, there are a few quick and easy ways to get started right away:

1. Be sure you are labeling your products correctly.

It is important that you know what exactly is in your products and from there, accurately represent the information on the label of the product. Understand exactly what information has to be shown on these labels by knowing what makes your CBD product type unique.

2. Get proper insurance coverage.

Product liability.

This type of insurance will protect a company against any suits or claims that may arise from the products sold by the company, no matter if they were just sold by the company or also made by it. It will also cover a seller or manufacturer’s liability for any property damage or bodily injury that is sustained by a third party because of a malfunction or defect in the product.

Commercial general liability.

This type of insurance is designed to protect your business and yourself from any loss if you are found to be liable legally for property damage, bodily injuries, advertising injury or certain personal injuries.

3. Have protective and thorough contract provisions.

  • Indemnity provisions are important for all stages of the supply chain.
  • This will allocate the risk and expense if there is a default or a breach by one of the entities in the contract.
  • You can also require any counterparts to get adequate insurance and then name you as someone else insured which will help cover any financial losses.

4. Be choosy about where your products are sold.

Choose locations that are more friendly to the consumer than the business, including New Jersey and California.

5. If you receive a lawsuit notice, react quickly.

You should contact a defense counsel as soon as you are notified of a lawsuit.

Following these preventative measures may help you avoid serious damage in the future by minimizing the risk and fallout of a CBD lawsuit.

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