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Product Liability: Are You Covered?

By Patty Schmucker
Posted: May 23, 2008, from the July 2007 issue of Skin Inc. magazine.

When it comes to product liability insurance for your spa, there can be many questions. Should you have product liability insurance if you own a spa and sell products to clients? Are you legally exposed if your client has an adverse reaction to a treatment, is injured while at your spa, or believes that you failed to warn her about a product you sold that might have ingredients or packaging that could cause harm?

The answers to these questions depend on many factors, including the location of your business, whether you can prove you followed a manufacturer’s instructions, the quality of the relationship you have with your clients, and where you fall in the supply chain. Knowing these answers can help you when potentially difficult situations come up down the road.

Chain of command

It’s best to start by understanding the supply chain. The Food and Drug Administration (FDA) and the United States legal system have, throughout the years, legally identified what constitutes a manufacturer, a supplier and a seller, or, in other words, the major players in the supply chain.

A manufacturer is any company that produces a product,” says Carl Geffken of Geffken Consultants and chairman of the Technical Regulatory Committee for the Independent Cosmetic Manufacturers and Distributors Association (ICMAD). “A cosmetic manufacturer is one that has the equipment and expertise to physically blend raw materials resulting in products that can be used on the body,” explains Geffken.

Dermalogica is one example of this type of manufacturer. It owns the facilities to physically produce the brands it sells in the professional spa market. When Dermalogica sells a brand direct to your business, Dermalogica is the manufacturer and the supplier. If Dermalogica sells its goods through a distributor, who then in turns sells to you, Dermalogica is the manufacturer, while the company you buy from is the supplier, and you are the seller.