When Ingredients Become Evidence: Inside Beauty’s Product Liability Crisis

Product liability has become one of the most consequential—and misunderstood—risk areas facing beauty brands today. As scrutiny around ingredient safety intensifies, high-profile litigation tied to talc, asbestos, benzene and phthalates has reshaped everything from formulation strategy to insurance availability. At the same time, social media amplification, influencer commentary and what some experts call “junk science” have fueled consumer anxiety and complicated an already complex legal and coverage landscape.

In this Q&A with Kenneth Hegel of Epic Insurance Brokers & Consultants, we unpack the real product liability threats confronting cosmetics companies, the insurance policy traps that can quietly leave brands exposed and the practical steps—ranging from reformulation to ingredient certification—that can help mitigate future risk. For founders, formulators and executives navigating today’s heightened enforcement and litigation environment, understanding where science, coverage and perception collide has never been more critical.

The Hidden Legal Risks Lurking in Cosmetic Ingredients

Q: What are the top product liability issues currently facing beauty brands, particularly concerning ingredients like asbestos, talc and benzene?

Hegel: This is an excellent question. From a products liability perspective, the cosmetics industry has always been held to a higher standard in terms of product safety. The scrutiny that they have received over the years----has left many consumers confused but also has chased many insurance providers away from being interested in offering insurance for products liability to the industry. The issue has been exacerbated via social media channels, certain beauty & ingredients experts, as well as influencers, and unfortunately what I would deem “junk science”. Click bait seems to be more important that of real true science in a lot of instances.

There are ingredients that have been called into question due to proven scientific negative impacts---some that have been around for a while---some newly emerging. The asbestos/mesothelioma issue has been around for over 50 years but resurfaced a few years ago with massive talc lawsuits alleging asbestos being contained in individual talc products i.e., talc and baby powder. This then carried over into not just talc powder individually, but cosmetic products that did contain talc as an ingredient such as in pressed color cosmetics. This negatively impacted the industry for a multitude of reasons but mostly on the products liability coverage side as the vast majority of products/general liability insurance carriers have adopted the “absolute asbestos exclusion.”

This not only voids products liability coverage for allegations of mesothelioma but also voids any defense coverage whatsoever. Clients were forced to either reformulate their products or prove that the talc used in their products were in fact safe from any asbestos contamination. This unfortunately meant that all legal expense was born by the individual cosmetic company defending the lawsuit with little to no support from insurance. Benzene and phthalates are two more ingredients that are getting a lot of publicity lately due to the fact that they have been deemed carcinogens and also endocrine disruptors.

Q: What are some common pitfalls regarding insurance policy exclusions that could void a beauty brand's coverage obligations?

Hegel: One of the most common pitfalls is that most clients buying insurance are more focused on the price than on the coverage. The simple truth is we live in a world where everyone is cost conscious. The reason I mention that is that not all insurance products are made the same. One can purchase a policy for cheaper. However, cheapest oftentimes can equate to lessor or simply poor coverage.

The number of insurance carriers interested in offering products liability insurance to beauty and cosmetic companies varies. However, I would say that it is always best to partner with a carrier or broker that understands the business that you are in and specializes in it. Not all insurance policies are made the same. There are two different basic coverage forms---an occurrence form vs a claims made form. Occurrence form offering much broader coverage to companies but can also be harder to find. One also needs to be conscious of the exclusions built into the policy—that in many instances—can void the very coverage you think you are buying. Endorsements and exclusions amend the coverage terms and conditions. It is important to review all aspects of coverage—not only what is covered, but more so—what is not covered by a specific policy or if a policy even exists to cover certain exposures.

Q: Do you have any tips for ingredient replacements or certifications (e.g., certifying talc, using corn starch instead of talc) that can help beauty brands prevent future liability issues?

Hegel: During the “asbestos in talc reemergence—we saw a large portion of our clients decide to reformulate the product as opposed to deal with the risk of exposure to class action litigation. Some customers who did use cosmetic talc in their products reformulated to use corn starch in its place, corn starch having similar properties to talc with zero negative press/science. Other clients chose to get ahead of the game and have their cosmetic talc tested and certified as “asbestos free.’ The downside to this is the testing can be expensive as there are only certain labs that test for this. Having this certification also does not preclude you from being pulled into the lawsuit to begin with. Proper safety testing and continued focus on the ingredients and technology being used in product development remain the best ways to ensure the product is safe.