Life Science blog; Insuring R&D

With the importance of a strong pharmaceutical research base clearly highlighted in 2020, Research and Development (R&D) is going to be more prevalent than ever within the life science sector in the coming years. This is epitomised by the governments’ recent commitment to provide £22bn per year towards annual research, a significant proportion of which will be directed into the sector.

From an insurance perspective, R&D activities aren’t commonly insured and certainly wouldn’t be found within most generic policies. Particularly for businesses with a significant focus on these activities, it is important to ensure you have a specialist life science insurance policy to fully cover your unique risks.

R&D property damage

R&D property, such as consumables, cultures, samples and resulting products prior to regulatory approval, should be specifically insured and cover the costs of reproducing that property should an event occur causing damage.

However, rather than insuring R&D property for the standard set of insurance perils, it is important to think about the specific risks associated with the environment such as an accidental change in controlled environment conditions which could cause unexpected stock damage. Additional examples of specific risks that can be covered against R&D property include damage caused by contamination (also covering the costs of cleaning up and removing such contaminants).

These eventualities can be covered across the property section of any tailored life science policy, and can importantly extend to include R&D property.

Continuing expenses & milestone payments

Business Interruption traditionally covers a loss of income and/or increased costs of working as a result of physical damage to the property that a business operates in, as well as a range of sector specific extensions. These extensions can include covering the costs of continuing research expenses and lost milestone payments, which can provide peace of mind for businesses.

Continuing R&D expenses (in the event of physical damage interrupting work) would protect against the costs being incurred by a business had such damage and interruption not occurred.

Similarly, if damage has occurred and interrupted R&D activities, cover can also be sought for a loss of income, i.e. milestone payments. Therefore, future and dependent milestone payments used to further R&D operations can potentially be reimbursed by insurers.


Insurance in its most simple form is the transfer of risk from a business to an insurer. R&D activities have their own set of unique risks, which businesses can cover within a tailored and carefully constructed policy. Doing so provides much-needed reassurance and addresses financial contingency planning in a worst-case scenario.

About the author

Ryan Legge is a Chartered Insurance Broker and has vast experience working with all manner of life science businesses from the research community upwards. If you have any additional queries or would like an alternative quote for your life science business get in touch with Ryan via phone or email:

07889 561 414 | [email protected]