Resources & Insights

Insurance for Life Sciences and Biotech Companies

April 3, 2020

Spencer Mahoney,
Executive Vice President

No matter the industry, every company needs property, auto, general liability and workers’ compensation insurance. But there are two more lines of coverage every life sciences company needs: Clinical Trials Liability and Product Liability.

We know it can take years from concept to final FDA approval for a new drug or product to be approved, and testing can involve a large population of human subjects participating in trials. In other words, a lot can go wrong.

The good news is that, thanks to the introduction of artificial intelligence, the clinical trial process, including recruitment, selection and patient monitoring, is improving. On the other hand, AI as we know it today is definitely not the magic bullet and clinical trials still come with high failure rates.

This all creates a big exposure to risk for pharmaceutical and medical technology companies – an exposure that includes the potential for bodily injury and other ill effects of trials that may not present themselves until years later.

That’s where Clinical Trials coverage comes in, typically providing coverage in two main areas:

  • Negligent harm to trial participants/volunteers. This includes coverage for legal costs, expenses and damages awarded to the participant in the case of an act of negligence from the sponsor, investigator or Contract Research Organization, or CRO, involved in the trial.
  • Non-negligent harm (no-fault compensation). This includes coverage for compensation awarded to the participant if they suffer non-negligent harm (side-effects and symptoms) during the course of the clinical study.

Any company running a clinical trial involving human participants needs Clinical Trials insurance, but in most cases, there’s nothing optional about it; it’s a regulatory or contractual requirement.

Although commonplace, securing Clinical Trials coverage can take a bit of effort.

Often, we’ve seen companies wait until the last minute before acquiring Clinical Trials coverage. When there are multiple locations involved, each requiring a policy and certificate that is compliant with local regulations, along with a need for absolute accuracy, getting things done in a couple of days can be stressful for everyone involved.

The pressure worsens when the insurer has questions about the trial that further slows the process.

We should also note that companies with poor risk management practices can expect to have a tougher time obtaining Clinical Trials insurance, or may have to pay more for less protection.

Product Liability coverage, meanwhile, protects life science companies from lawsuits related to defects in their products that cause personal injury or damage.

While in some ways similar to general liability insurance, Product Liability is a unique form of insurance specifically designed for businesses that manufacture and sell products.

The costs incurred in defending against a Product Liability claim can be extensive. They include defense, litigation and medical cost containment. In addition, there can be expenditures for surveillance, litigation management as well as fees for appraisers, private investigators, hearing representatives and fraud investigators. A Product Liability policy would cover these costs.

When things go right, the work of life sciences companies can yield medical advances that can help improve millions of lives. Having the right insurance policy in place can help when things don’t go as planned.

Spencer Mahoney, Executive Vice President, leads CCIG’s Life Sciences practice. Reach him at 720-212-2051 or

CCIG is a Denver-area insurance, employee benefits and surety brokerage with clients nationwide. We do more than make sure you have the right policy. We help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.

Also readCures 2.0: New Liability for Life Sciences?

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