Life science companies are exposed to various lawsuits. The main exposure of these companies is bodily injury to third parties. Therefore, the various risks of the company must be identified, even before the start of the activity, and know how to adapt solutions to them in advance, both by purchasing appropriate insurance and by examining the commercial agreements.
Directors’ and Officers’ Liability Insurance (D&O)
Protects the officers against personal claims against them filed by third parties for negligence in the management and supervision of the business. For example, investor claims, claims from competitors, and employee-employer relations claims.
This insurance often comes up as a requirement in investment agreements, so examining the insurance section with an insurance agent and a lawyer specializing in the field is recommended.
General Liability and Product Liability
A policy that covers the company for third-party claims arising from bodily/property damage caused by the company’s negligence or a failure of the company’s product.
Errors & Omissions Insurance for Life Sciences Companies (E&O)
Insurance is very important and must be purchased at the start of sales. Unlike D&O insurance, E&O insurance protects the company itself from claims filed by a third party for negligence in the provision of its professional services resulting from financial damage. For example, intellectual property claims (except for patents) and employee disloyalty. It is important to note that professional liability insurance generally excludes claims arising from bodily/property damage.
Since bodily and property damage are the main exposures of life science companies, it is necessary to make sure that the policy does not exceed these damages, or alternatively to ensure that the professional liability policy is combined with the general liability and product liability insurance or that the same insurer draws them up.
Protects the company from third-party claims because of a cyber incident (for example, claims for information leakage). The insurance also protects the company’s own damages because of a cyber incident (first-party coverage): loss of income as a result of the incident, payment of a ransom, initial response team (including an attorney, forensics, and public relations), payment of reporting expenses according to privacy regulations Miscellaneous (Notification Costs), expenses for regulatory investigations (CCPA/GDPR).
Life sciences companies that have bodily/property damage exposure because of a cyber incident, for example, digital health companies, should make sure that the cyber policy does not exceed bodily and property damage’ or alternatively make a combined policy including cyber, professional/product and third-party liability coverage.
Clinical Trials Insurance
The insurance covers the company for claims by experimenters or third parties for bodily harm because of the experiment. To sign the policy, an informed consent form and an approved protocol are necessary.
Key Man Insurance
This insures the key people in the organization against the event of death or disability, which will cause their work to stop prematurely. In this case, the policy will pay the company a one-time financial compensation, which will protect the company against future loss of profits due to the death of one of the key people in the organization.
Employment Practice Liability Insurance (EPLI Insurance)
This insurance covers the company and the company’s officers as a result of claims against them by employees related to employer-employee relations. These are not lawsuits related to non-payment of wages but claims related to the work environment, such as illegal dismissal (for example, without conducting a legal hearing), discrimination in the workplace, and more.
This policy is very important when there are employees in the US. These lawsuits are very common there (mainly in New York and California), and it is a very expensive claim management. It is true that there is often similar coverage through worker’s compensation insurance providers, such as Trinet. Still, this insurance usually includes a very high deductible, and the liability limit in the policy is shared with many other companies.
Business Owners Insurance
This is the basic insurance, which provides coverage for damages caused to the structure and contents of the business. In addition, the insurance provides coverage for third-party claims arising from bodily/property damage caused to the third party through the company’s negligence. In addition, it is important to take care of employer liability coverage. The insurance provides coverage to the employer due to bodily injury caused to the company’s employee due to the employer’s negligence.