Medical device/equipment/consumables/disposables/durables companies inevitably face risks beyond the standard roster of conventional business risks. MANN INSURANCE 630-546-9303 INSURES ALL OF THESE RISKS.
At MANN CONSULTING, we realize that there are no cookie cutter insurance solutions, but MANN CONSULTING's medical device insurance specialists can greatly simplify the process for you. Our experience covers all possible bases. With it, we've earned a reputation for outstanding medical device policy development and client service. Unlike some insurance brokerage firms who rely on a "just provide us a quote" approach, our medical device experts will serve as true advisors to your company, whether you're a startup enterprise or a larger corporation.
Based on a clear understanding of your medical device business, we will educate, inform, and help you clarify your risks, identify your coverage needs and guide the development of customized policies and risk management programs specific to your company's circumstances. We'll provide you with a risk analysis that includes:
- A review of your company's areas of potential exposure to risk
- An audit and review of your current insurance contracts
- An assessment of whether your existing coverage and risk management techniques adequately address your needs
- Special attention devoted to identifying any gaps in coverage that put your company at increased risk
Should a distributor or independent sales rep be concerned about liability? You are probably getting pressure from more and more manufacturers to prove that you have insurance coverage for claims arising out of "your negligence." The bigger companies "self insure" the first $100,000 to $5,000,000 of their own liability, so unless they can transfer potential liabilities to others (you), that money comes out of their own pocket. If your manufacturing client is a start up or smaller player, they may not purchase adequate insurance to cover their own liability, let alone yours, which means that you may be drawn into a lawsuit. The burden is shifting to distributors and independent reps because manufacturers are wary of paying for claims that, in their opinion, are not their fault.
You can't count on the manufacturers' insurance policy and you should never assume that your defense will be picked up by someone else's policy. If a claim or lawsuit alleges negligent activities on the sales rep's part, all bets are off as to the manufacturer and its insurance company picking up your defense. It may not matter that the allegations have little or no merit. Mere allegations may remove the sales rep from the orbit of a manufacturer's product liability insurance coverage. Even if ultimately the allegations against a sales representative are exposed as fallacious, it may take the court system years to reach this level of certainty. In the interim, sales reps definitely need their own defense to lawsuits.
Potential Liabilities of Distributors and Independent Sales Reps
- Contractual Risk Transfer: You may be required to hold the manufacturer harmless from any and all claims arising out of a breach of your duties as the distributor or sales rep.
- It might be construed that you misrepresented the product and therefore the manufacturer holds you responsible for a claim that caused bodily injury or property damage.
- It may also be construed that you gave the wrong advice or misrepresented a product and there is a consequential or financial damage that arises - "you said it would do X and because it didn't, we want our money back AND financial damages on top of that".
- Workers Compensation
- You may be responsible for product samples
- Automobile exposures
- Wrongful "employment practices"
- Shipping of the manufacturer's product
- Overseas travel
- Handling of funds
- Privacy issues
- Business interruption
Methods to Manage Your Risk
1. Have your attorney review the contract. An insurance company will want the contract to be very specific. As an example, if the manufacturer is asking you to hold them harmless, then you should consider asking the manufacturer to hold YOU harmless as well. You should ask to be named as an "additional insured" under the manufacturer's general liability, professional liability and umbrella policies. It's also important to be added as an insured under "management liability" policies, such as employment practices coverage. You also need to watch out for contracts which state that you are responsible for payment of the deductible of an errors and omissions claim arising out of an incident that is deemed to be your fault.
2. The contract has a direct impact on the availability and pricing of both general liability and product liability insurance. Make sure you have general liability including products liability coverage to defend you for your alleged negligence (aka "Gap Liability").
3. Don't count on the manufacturer's insurance picking up injury to your employees. It may be your responsibility - Workers comp laws are different in each state, so check with an insurance professional for compliance.
4. Ask "Who's responsible for products in my possession?"
5. The manufacturers' automobile insurance coverage will provide limited benefits, if any. Watch out for "who is insured" provisions in the manufacturers' coverage. Also, it might make sense to read the fine print on the back of a rental car agreement to determine what protection is available.
6. If you travel overseas, never assume that your workers compensation or health insurance will follow you. It might make sense to invest in a "foreign insurance" policy which may also include "repatriation" coverage - the cost to get you back home.
How do you find the Right Insurance Coverage?
1. Find an insurance professional with specific experience in placing insurance for distributors of medical devices. Specialists will know the right questions to ask, which will save you time and money. Many times, these brokers have checklists which are specific to your industry.
2. Investigate "group buying." You may be able to save money by joining a buying group, which might provide some premium savings, but remember - you are now sharing limits of liability with others. One claim may reduce the limits available for future claims. It won't matter how much money you saved if you have an uncovered claim! Be extra careful when looking at "who is insured" provisions - you may not be getting what you paid for.
3. Value, Value, Value. Specialty insurance carriers (those who have specific policies for medical device exposures) provide more than just policies. Take advantage of the value added services they offer, such as loss control and risk avoidance advice.
4. Even though you may not be familiar with insurance policies, there are a few "safe" questions to ask your broker or insurance professional: Why are you recommending this insurance carrier? What are the important exclusions? How many insurance carriers offered a bid on my business? What value added services are available? Did the insurance carrier look over our contracts?
Make the time to review liabilities as a distributor of medical devices by seeking out professionals in the industry. As the burden of liability increases all along the supply chain, independent agents will find that protecting their businesses in the future will require more attention to risk management.