Glossary · 25 entries
MSA Insurance Clause Glossary. Plain English.
The 25 clauses pharma and medical device sponsor MSAs use most. 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 →
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