Does a medical device startup need product liability insurance before the first sale?
Many founders assume product liability starts when the first unit ships. In practice, some of the work starts earlier.
The answer depends on what you're doing before the sale
Testing with participants, pilot placements in hospitals, and agreements with distributors can all raise the question before commercial sales begin. Check your contracts and your sponsor or site requirements before assuming you're covered.
What product liability covers
Product liability responds when a device, diagnostic, or therapeutic product is alleged to have injured someone or damaged their property. It can include the cost of defending a claim and paying damages or settlements. Claims can surface years after the product was sold, so timing matters.
Why contracts often decide the limits
Hospitals, distributors, and partners frequently write insurance requirements into their agreements. Those clauses usually set minimum limits, and sometimes name the parties that must be included as additional insureds. A startup that signs a supply agreement without reading the insurance section can find itself out of compliance on day one.
What to gather
- Your current and planned products, including whether you design, make, label, or import them
- Every distribution, supply, or placement agreement you have signed or are negotiating
- Where the products will be used and sold
- Any regulatory approvals or licences you hold, and the ones you're pursuing
A common mistake
Founders often buy a general business policy and assume it includes product liability. Some do not. Ask directly whether the product is covered, and whether the limits meet your contracts.
Ready to talk it through?
Send your details through the risk review form, or call Elia George at (905) 361-9292.
Coverage descriptions here are general information only and are not a binder, quote or guarantee of coverage. Policy terms, conditions, limits and exclusions govern. Availability is subject to insurer underwriting. Insure The Lab is a marketing initiative operated by Elia George, who is contracted with St. Andrews Insurance Brokers. Insurance products are offered through St. Andrews Insurance Brokers. Elia George is compensated by commission. See the St. Andrews commission disclosure.