Glossary · 49 entries
Life Sciences Insurance Clause Glossary. Plain English.
The 49 clauses life-sciences contracts use most - sponsor MSAs, GPO supplier agreements, PBM credentialing, hospital purchase contracts, clinical trial agreements, 503B outsourcing. For each: what the language actually says, what it means in plain English, what it costs to satisfy, and whether the clause is negotiable.
- LimitsStandard
Commercial General Liability - $1M / $2M
Standard commercial liability coverage at the most common limit. This is the floor - almost every pharma/biotech sponsor MSA includes this language verbatim.
Read full breakdown → - LimitsStandard
Products / Completed Operations - $5M
Coverage for bodily injury or property damage caused by your finished product after it leaves your facility. The $5M limit is the most common contract manufacturer requirement.
Read full breakdown → - LimitsNegotiable
Products / Completed Operations - $10M
Higher-tier products liability limit, typical for sponsors manufacturing oncology, biologics, injectable products, or any Schedule I-IV controlled substances.
Read full breakdown → - LimitsStandard
Workers Compensation - Statutory
State-mandated workers compensation plus a $1M employers liability layer.
Read full breakdown → - LimitsStandard
Commercial Auto - $1M CSL
Auto liability covering company vehicles and employees driving on company business.
Read full breakdown → - LimitsStandard
Umbrella / Excess - $5M
A second layer of liability sitting above your primary policies.
Read full breakdown → - EndorsementsStandard
Additional Insured - Ongoing Operations
The sponsor and their related companies need to be added to your liability policy so that if someone sues both of you over your work, your policy defends and pays for them too.
Read full breakdown → - EndorsementsStandard
Additional Insured - Products / Completed Ops
The sponsor needs to be added as an additional insured specifically for product-related claims, not just operations claims.
Read full breakdown → - EndorsementsStandard
Primary and Non-Contributory
Your insurance pays first and pays in full, even if the sponsor has their own insurance that could also respond.
Read full breakdown → - EndorsementsStandard
Waiver of Subrogation
If your insurer pays a claim, they cannot turn around and try to recover the money from the sponsor.
Read full breakdown → - EndorsementsAggressive
Notice of Cancellation - 30 Days
You must tell the sponsor 30 days in advance if your insurance is going to lapse or change materially.
Read full breakdown → - IndemnityNegotiable
Mutual Indemnity
Each side covers the other if their own bad behavior causes a third-party lawsuit.
Read full breakdown → - IndemnityAggressive
One-Way Indemnity (Manufacturer Indemnifies Sponsor)
You alone agree to defend the sponsor and pay for any third-party claim that arises from your work - even if the sponsor was partially at fault.
Read full breakdown → - IndemnityAggressive
Indemnity Cap Aligned to Insurance
Your maximum exposure under indemnity is capped at your insurance limits.
Read full breakdown → - SpecialtyNegotiable
Professional Liability / E&O - $2M
Coverage for losses caused by professional errors that do not result in bodily injury or property damage.
Read full breakdown → - SpecialtyAggressive
Clinical Trial Liability
Specific coverage for harm to human subjects participating in a clinical study.
Read full breakdown → - SpecialtyNegotiable
Recall Coverage - $1M
Coverage for the costs of pulling product back from market - your costs and the sponsor's costs.
Read full breakdown → - SpecialtyStandard
Cyber Liability - $3M
Coverage for data breaches, regulatory fines from privacy violations, and business interruption from cyber events.
Read full breakdown → - SpecialtyStandard
Crime / Employee Dishonesty
Coverage for theft by employees and certain types of fraud.
Read full breakdown → - SpecialtyStandard
Cargo / Warehouseman's Legal Liability
Coverage for damage to the sponsor's materials while you have them in your facility or in transit.
Read full breakdown → - ComplianceStandard
Carrier Rating - A.M. Best A- VII or Better
Your insurance company has to be financially strong (rated A- or higher with at least $50M-$100M of surplus).
Read full breakdown → - ComplianceStandard
Occurrence Form Required
Your liability policy needs to cover claims based on when the incident happened, not when the claim is reported.
Read full breakdown → - ComplianceStandard
Severability of Interests / Cross Liability
Each insured under the policy is treated as if they had their own separate policy, so the sponsor (as an additional insured) cannot be denied coverage just because you (the named insured) did something wrong.
Read full breakdown → - ComplianceNegotiable
Survival of Coverage Post-Termination
You have to keep buying insurance for years after the contract ends.
Read full breakdown → - ComplianceStandard
Certificate of Insurance Delivery
You have to give the sponsor a certificate proving you have the required insurance.
Read full breakdown → - SpecialtyStandard
USP 797 Sterile Compounding Compliance
USP 797 governs preparation of compounded sterile preparations. Insurance riders increasingly require documented compliance, validated cleanrooms, and current SOPs to underwrite druggist professional liability and products coverage.
Read full breakdown → - SpecialtyStandard
USP 800 Hazardous Drug Handling
USP 800 governs handling of hazardous drugs (NIOSH list) - chemotherapy, hormones, antivirals, immunosuppressants. Compliance affects facility design, PPE, environmental controls, and training, with insurance implications for workers comp, products, and pollution.
Read full breakdown → - SpecialtyStandard
503B Outsourcing Facility FDA Registration COI
503B outsourcing facilities are FDA-registered drug manufacturers under section 503B of the FDCA. Hospital purchase contracts with 503Bs typically require cGMP-aligned property coverage, $5M-$10M products liability, and FDA-specific recall extensions.
Read full breakdown → - ComplianceStandard
PBM Credentialing Insurance Requirements
PBM network agreements (Express Scripts, CVS Caremark, OptumRx) require druggist professional liability and general liability minimums plus current COI on file. Lapses cause silent network removal - the pharmacy keeps dispensing while claims get denied.
Read full breakdown → - ComplianceStandard
GPO Supplier Insurance Standards
Group Purchasing Organizations enforce minimum insurance schedules on awarded suppliers. Typical floors: $5M GL, $10M products, $25M aggregate for higher-risk implantables, plus additional-insured/primary-noncontributory wording and 30-day notice.
Read full breakdown → - SpecialtyAggressive
GLP-1 Compounding Carrier Exclusion
Following March 2026 FDA enforcement against large-scale GLP-1 compounding, several specialty carriers added exclusions for claims arising from compounded versions of FDA-approved branded drugs (semaglutide, tirzepatide).
Read full breakdown → - SpecialtyStandard
Druggist Professional Liability
First-party professional liability for pharmacists and pharmacy operations. Covers dispensing errors, compounding errors, counseling failures, and similar professional-services claims.
Read full breakdown → - ComplianceStandard
Joint Commission Medication Compounding Certification
A voluntary Joint Commission certification for medication-compounding services. Demonstrates SOP discipline beyond USP 797/800 alone; some hospital purchase contracts reference it as a quality signal in vendor selection.
Read full breakdown → - SpecialtyStandard
D&O Liability for Clinical-Stage Biotech
D&O insurance covers personal liability of directors and officers for decisions made in their corporate capacity. For clinical-stage biotechs, the dominant exposures are securities class actions (for public companies), regulatory investigations (FDA, SEC), and breach of fiduciary duty claims related to clinical program decisions.
Read full breakdown → - SpecialtyStandard
Employment Practices Liability - $1M
EPLI covers employment-related claims by current, former, or prospective employees - discrimination, harassment, wrongful termination, retaliation, wage-and-hour violations (where insurable). It is a claims-made coverage with retroactive date considerations.
Read full breakdown → - SpecialtyStandard
Fiduciary Liability - $1M
Fiduciary liability covers personal liability of plan fiduciaries (typically including the CEO, CFO, and HR leadership) for ERISA-governed employee benefit plan decisions. Distinct from D&O because the fiduciary exposure exists in a personal capacity beyond the corporate role.
Read full breakdown → - SpecialtyStandard
Foreign Voluntary Workers Compensation
Foreign voluntary WC extends statutory-style workers compensation benefits to US-based employees temporarily working outside the country. Standard domestic WC policies do not extend coverage beyond US borders.
Read full breakdown → - SpecialtyStandard
cGMP Property with Validation Loss Endorsement
A property policy written specifically for drug manufacturers and 503B outsourcing facilities. Includes coverage for losses caused by cGMP excursions - environmental monitoring failures, sterility breaches, cleanroom contamination, HVAC and utility events - that generic commercial property forms exclude or sub-limit.
Read full breakdown → - SpecialtyStandard
Inland Marine for Medical and Laboratory Instruments
Inland marine extends property coverage to mobile or off-premises equipment - instruments at customer sites, devices in transit, demonstration equipment, samples and prototypes. Standard commercial property forms cover property at the named premises only.
Read full breakdown → - SpecialtyStandard
Environmental Impairment Liability
EIL covers environmental contamination claims - pollution release, cleanup costs, third-party bodily injury and property damage from environmental conditions. Standard CGL policies have absolute pollution exclusions; EIL is a separate purpose-built coverage.
Read full breakdown → - ComplianceStandard
Extended Reporting Period (Tail Coverage) on Claims-Made Lines
Tail coverage (also called Extended Reporting Period or ERP) extends the time window during which a claim can be reported under a claims-made policy after the policy has been cancelled, non-renewed, or replaced. Without tail, claims arising from prior-period acts but reported after expiration are uncovered.
Read full breakdown → - EndorsementsStandard
Specific Waiver of Subrogation Against Sponsor
Subrogation waivers prevent the insurance carrier from pursuing reimbursement from a named party after paying a claim. Most blanket waivers cover "any party with whom Vendor has agreed in writing to waive subrogation" but sponsor MSAs often require the waiver named specifically.
Read full breakdown → - SpecialtyStandard
MDR (Medical Device Reporting) Liability Extension
A products liability extension covering MDR-related defense and indemnity. MDRs (mandatory reports of device-associated death, serious injury, or malfunction) often precede or accompany product liability litigation; this extension ensures the products policy responds to defense costs at the MDR stage.
Read full breakdown → - ComplianceAggressive
CGL Manufacturers' Exclusion Warning
A specific warning against the "manufacturers' exclusion" - a CGL endorsement (ISO CG 21 49 or similar) that excludes coverage for products manufactured by the insured. Generic CGL policies sometimes include this exclusion by default; the result is no products coverage at all under the CGL.
Read full breakdown → - ComplianceStandard
Wrap-Up / OCIP Exclusion
A warning against wrap-up exclusions - endorsements that exclude coverage for work performed under an owner-controlled or contractor-controlled insurance program. Common in construction CGL and increasingly appearing in commercial CGL forms.
Read full breakdown → - SpecialtyStandard
Animal Health Products Liability
Products liability written specifically for veterinary and animal health applications. Some standard human-pharmaceutical products forms exclude veterinary products; some veterinary products forms exclude human products. Operators in both spaces need explicit dual coverage.
Read full breakdown → - SpecialtyStandard
Crisis Management and Brand Rehabilitation
Crisis management and brand rehabilitation are typical sub-coverages within a dedicated product recall policy. Crisis management pays for outside consultants (regulatory, PR, legal) brought in to manage a recall event. Brand rehabilitation pays for marketing and communications to restore brand trust after a recall.
Read full breakdown → - SpecialtyStandard
Cargo / Cold Chain for Biologics and Specialty Pharma
Specialty cargo coverage extending to biologics, cell and gene therapies, and other temperature-sensitive specialty pharma products. Coverage for temperature excursion and cold chain failure is the key differentiator; standard cargo forms often exclude or sub-limit these losses.
Read full breakdown → - SpecialtyStandard
Investigator-Initiated Study Coverage Extension
A clinical trial liability extension covering investigator-initiated studies - clinical trials run by an independent investigator (typically at an academic medical center) under that investigator's own IND, with financial or in-kind support from a pharma sponsor. Coverage typically follows the sponsor's investigational product and provided materials, with the investigator-sponsor named as additional insured.
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