What insurance does a small medical device company need?

Small device companies tend to buy insurance twice: once cheaply and early because a landlord or a customer asked, and once properly and urgently because a hospital, distributor, or investor asked. The second purchase is the real programme, and it usually arrives under a deadline.

Sequencing it by stage is what avoids paying for coverage you do not yet need while still having the coverage a contract will demand.

General liability and property are the operating floor, and they are what a lease and most early vendor agreements ask for. Workers compensation is statutory once you have employees.

If there is a clinical investigation involving human subjects, clinical trial liability is required by the protocol, the institutional review board, and the site agreements, and it is separate from both general liability and products. This is the item most commonly discovered late, because it is the sponsor obligation rather than a general business one.

Products liability at this stage is often modest, because there is not yet a product in commerce. What matters is not letting the retroactive date on any claims-made line start later than it needs to.

Products and completed operations becomes the centre of the programme. The limit is rarely chosen by you: it is set by whoever you are selling through. Hospital vendor agreements, group purchasing organisation contracts, and distributor agreements carry insurance exhibits with stated limits, additional insured requirements including products and completed operations, primary and non-contributory wording, and waiver of subrogation.

The endorsement wording is the part that fails certificates, not the limit. Additional insured status that omits products and completed operations is the single most common reason a device supplier’s certificate is rejected, because the general form of additional insured endorsement does not always extend to the product itself.

Cyber and technology errors and omissions matter as soon as the device connects to anything, holds patient data, or has a software component. For software as a medical device or a connected device, this is not an ancillary line, it carries a meaningful share of the real exposure.

Directors and officers follows outside capital. Once there are institutional investors and a board, D&O is generally a condition of the financing rather than an optional protection.

Recall coverage becomes relevant once there is volume in the field, since the cost of retrieving and replacing product is not covered by products liability, which responds to the harm rather than to the retrieval.

A business owners policy is a reasonable floor for the premises and contents, and it is inexpensive. What it does not reliably deliver is a products and completed operations limit that satisfies a hospital contract, professional or technology errors and omissions, clinical trial liability, D&O, or meaningful cyber.

There is also an eligibility question worth checking rather than assuming: a device company that was quoted and written as a generic technology or consulting business may have been underwritten on a description that no longer matches what it does, which is a weaker position than a known gap.

There is no universal number. Cost is driven by device class and whether the device is implantable or life-sustaining, revenue and units in the field, whether manufacturing is in-house or contracted, the clinical context of use, and the specific contract limits you have to meet.

The most useful first step is not a quote, it is reading the insurance exhibit of the contract you are trying to sign, because that document usually dictates most of the programme.