When a business goes looking for general liability insurance, the options they have can seem somewhat similar: your goal really is to find the insurance carrier who best understands your business/industry, but once you find that carrier, the policy you get ends up looking a lot like the policy for any other type of business. The standard general liability policy contains a number of different insuring agreements, including coverage for:
- Premises/Ongoing Operations Liability
- Products/Completed Operations Liability
- Personal/Advertising Injury Liability
- No-fault Medical Payments
Whether you’re a baker or a mechanic, your policy will likely contain each of these parts. However, in the life sciences industry, this is not the case. For life science companies, coverage for products/completed operations is often excluded, even with insurance companies that specialize in working with life science business.
To understand why, it’s helpful to think about how an insurance company assesses risk: after talking with your agent, reviewing applications for coverage, and any other sources of information they have (websites, sales materials, financial info, etc), they then compare your business with other business like yours. So, if you’re a baker, they compare you with other bakers; if you’re a mechanic, other mechanics.
The nature of life sciences business is a bit different. Because each company is researching, developing, and testing new and unique treatments, assays, etc, there just aren’t a lot of similar companies for an insurance carrier to compare you to. And since the outcomes and potential downsides of something like a new pharmaceutical aren’t yet known, carriers exclude coverage for products/completed operations from the standard policy.
The underwriters may then offer coverage on a new product liability policy that takes into account risks and exposures that a regular general liability policy may not, like clinical trial participants. This policy will offer coverage for bodily injury and property damage caused by your product. In addition, an endorsement for professional liability may be available for any financial/economic injury that is caused.
Hausmann-Johnson Insurance has a team of professionals dedicated to serving the life science industry.
Let us know how we can help.