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There are several different types of laboratories, and each has its own unique set of exposures. This classification includes non-medical testing laboratories and research and development laboratories. Laboratories are used to test the performance of products, compare product characteristics, and for quality control.
Property Exposures are dependent upon the fire and theft potential of the particular items being tested. Key items to evaluate are the chemicals, combustibles, and flammables being researched, tested, or used. Storage should be in fireproof file cabinets, and fire suppression systems must not damage papers or product samples. The laboratory must have adequate security features to prevent unauthorized access due to industrial espionage. Precious or exotic metals should be inventoried and kept in a secure location. Laboratories need to maintain sterile conditions. A small fire could cause a total loss if the smoke contaminates the work area and re-sterilization must take place. Business income could be affected during a lengthy downtime.
Crime exposures include employee dishonesty in the taking of inventory and false billings. The exposure increases in the absence of thorough background checks on all employees. Ordering, billing and disbursement duties must be separated and regular audits performed.
Inland marine exposure consists of computers, accounts receivable, and valuable papers and records. The computers generally have hardware and software designed specifically for laboratory testing. These are very expensive and must be backed up regularly. Computer systems must have adequate security features to prevent unauthorized access due to industrial espionage or by hackers. Valuable papers and records consist of testing results of clients. Duplicates must be made often and stored off site. Storage on premises should consist of fireproof cabinets.
Occupiers’ Liability exposure is low as clients do not generally visit the laboratory. Off-premises exposures are minimal.
Environmental impairment exposure can be significant due to the use of chemicals during the testing process. There must be a documented method of disposal for all items tested as well as disposal of solvents or acids used in testing protocols.
Professional/errors and omissions exposures are extremely high. Because decisions are made based on the lab results, exact protocols must be followed and detailed documentation must be written. All testing equipment should be regularly maintained with frequent calibration verification to avoid skewing test results. Sterile environments must be maintained to prevent contamination in the testing environment. The laboratory should be certified or accredited. All employees must be thoroughly checked for licences, educational and experience background. All must meet continuing education requirements.
Automobile exposure may be significant if the laboratory picks up samples for testing. An analysis must be made as to the type of driving, the vehicles’ needs, or any special terrain problems. Of particular concern are the items to be transported and the impact that a spill might have on the environment or other drivers. Age, training, experience, and records of the drivers, as well as age, condition, and maintenance of the vehicles, are all important items to consider.
Workers compensation exposures can be very high due to work with chemicals and other potentially hazardous substances. Employees may be exposed to slips and falls, back injuries from lifting, burns, shocks from malfunctioning electrical equipment, contact dermatitis, and occupational disease. Employees should have appropriate safety gear when handling test samples, and be aware of possible reactions and symptoms. Work areas must be ergonomically designed to prevent repetitive motion injuries and fatigue.
Minimum recommended coverage:
Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Professional, Environmental Impairment, Umbrella, Hired and Non-owned Auto, Workers Compensation.
Other coverages to consider:
Building, Computer Fraud, Dishonesty, Disappearance and Destruction, Employment Practises Liability, Business Auto Liability, and Physical Damage.
To see what custom coverage is best suited for your business, contact the Axis Insurance Group today.
