Founding a life science company can be intense, as you take discoveries out of the lab and into the real world. As you build your team, secure funding, and prepare for trials or product development, insurance becomes an important tool to protect what you’re creating.
Be under no illusions, insurance in life science is no tickbox exercise. A good insurance programme should be structured strategically to wrap around your business, ready to deal with threats that could be existential. And along with the cover, you’re going to need sound advice from a broker you trust.
Whether you’re developing a device, diagnostic, or therapy, there are certain fundamental covers you should be considering.
Cyber insurance
It’s likely you hold patient and trial data which you are responsible for protecting. If your systems are breached or data is mishandled, you could face expensive legal action, regulatory fines, PR costs, and mandatory notifications. Cyber insurance helps cover those costs and provides funds to ensure your business can get back up and running swiftly after a curve-ball.
Intellectual property (IP)
Patents and proprietary data may represent the bulk of your company’s value in the early stages. This intellectual property needs protecting from the get-go. IP insurance provides cover for legal costs if you need to defend yourself against an infringement allegation (defence insurance) or take action against infringement by someone else (pursuit insurance). It’s a critical safeguard for R&D-heavy businesses.
Product liability
If someone is harmed by a medical device, supplement, cosmetic, or drug you’ve developed, your company may be liable. Product liability insurance covers legal defence and compensation costs, helping you protect your business if something goes wrong.
Clinical trials insurance
Compensation claims can arise if participants are injured or adversely affected during clinical trials, regardless of fault. Clinical trials insurance covers these scenarios and is often required by regulators or CROs. Look for policies that include non-negligent harm cover.
Directors’ & officers’ (D&O) insurance
Founders and team members can be held personally liable for decisions made on behalf of the business. D&O insurance covers legal fees and claims brought by regulators, investors, or employees – for mismanagement, discrimination and a host of other risk exposures. It’s a standard requirement for funded companies, and protects leadership at every stage.
Public liability (bodily injury & property damage)
Any business that interacts physically with clients, labs, offices needs this cover. If someone is injured or property is damaged in the course of your work, public liability insurance covers the associated costs and legal bills.
Spoilage of stock
High-value research stock is vulnerable to spoilage, from freezer failures to transport delays. This cover reimburses the cost of lost materials, remanufacture, and wasted R&D spend. Many policies can also extend to protect stock in transit.
Employers’ liability
Required by law in the UK, employers’ liability insurance covers the costs associated with claims from employees who become injured or unwell due to their work. Whether your team is lab-based, office-based or remote, this protects both the business and its people.
Aguila supports life science companies with specialist cover across the UK, EU, and US from early R&D to global scale.
If you want to talk any of this through, here’s my direct email: luke.chesworth@aguilarisk.com.