What are the risks of CDMO operation that drive insurance requirements?

Sponsor MSA scope creep into uncapped indemnity. Standard sponsor MSAs include indemnity provisions that can extend well beyond the CDMO's insurance limits if read literally. The negotiation question is whether the indemnity is capped at insurance limits or at contract value - the difference can be the difference between an insurable risk and an existential one.

Products liability tower adequacy. A CDMO accepting work under multiple sponsor MSAs needs a tower scaled to the largest demand and structured so the aggregate is not exhausted by one sponsor's claims at the expense of another. Per-project or per-location aggregate endorsements are the tool.

First-party recall execution funding. Sponsor MSAs increasingly require recall extension on products liability sized at $1M-$5M, separate from third-party limits. The recall is first-party (the CDMO's own cost of pulling product), not third-party - different coverage line.

Validation and cGMP property downtime. cGMP equipment validation losses are a distinct property exposure: loss of qualified state on critical manufacturing equipment can mean weeks of revalidation downtime even when the physical loss is small. Standard property forms do not address this - manuscript validation extension is required.

IP / trade secret exposure across sponsor work. CDMOs handling proprietary sponsor processes and formulations face IP infringement exposure (third-party claims that the sponsor's process infringes someone else's patent) and trade secret leakage (sponsor-vs-sponsor cross-contamination). Specialty IP and tech E&O coverage addresses this.