Mercantile / Medical technology
Medical Device & Medical Product Insurance
Insurance advice for companies that design, manufacture, import or distribute devices and medical products. Consider the product, its intended use, the contracts around it and where it is sold.
The risk in focus
Where cover matters
Insurance built around the actual exposure
Product injury
Review alleged bodily injury or property damage caused by a device, component or product defect.
Financial loss
Consider product errors and omissions where performance or results cause a customer financial loss without physical injury.
Recall and export
Examine withdrawal expenses, overseas sales, US exposures and distributor contract requirements.
Who we assist
Businesses we work with
We advise established businesses and growing companies. Insurers need an accurate description of the products, services and contractual roles involved.
- Medical device and implant manufacturers, including contract manufacturers and component suppliers.
- Importers, distributors, private-label suppliers and Australian representatives of overseas manufacturers.
- Diagnostic, imaging, monitoring and point-of-care equipment companies.
- Surgical instruments, consumables, single-use products and devices used in hospitals or homes.
- Medical software and connected device businesses where product performance and cyber risks overlap.
- Start-ups moving from prototype and testing to commercial supply.
The programme
What insurance may be needed?
There is no single policy that automatically covers every aspect of a life science business. Depending on the activities and insurer appetite, an insurance programme may include:
| Cover | What to examine |
|---|---|
| Products liability | Certain third-party bodily injury and property damage claims arising from an insured product, subject to exclusions and territorial terms. |
| Product errors & omissions | Certain pure financial loss claims from failure of a product to perform as intended, where expressly insured. |
| Professional indemnity | Design advice, consulting, installation, maintenance, training or other professional services provided by the business. |
| Product recall | Specified recall, notification, withdrawal and replacement expenses after an insured trigger; wording, limits and exclusions are critical. |
| Clinical investigation liability | Participant injury and related exposures when the business undertakes an insured clinical investigation; sponsor and site responsibilities need separate review. |
| Property & business interruption | Stock, equipment, premises and interruption following insured physical damage. |
| Marine transit | Equipment and stock moving between factories, warehouses, customers and overseas markets. |
| Cyber & management liability | Data and connected-product incidents, and certain management exposures, where relevant. |
Policy terms matter. The descriptions above are a guide to potential covers, not a statement of what any particular policy insures. Eligibility, exclusions, limits, sublimits, deductibles, territorial scope and disclosure should be reviewed against the proposed wording.
Consideration 01
Product injury and financial loss are different claims
A device failure may injure a patient, damage property or produce an inaccurate result that leads only to a financial loss. Standard public and products liability policies are generally built around bodily injury and property damage. They should not automatically be assumed to cover a customer’s pure financial loss.
Where a device provides data, diagnostics, therapy or critical monitoring, consider whether product errors and omissions or professional indemnity is needed alongside products liability. The distinction between a defective product and a service error can be especially important for software, design, installation and maintenance.
Consideration 02
Manufacturing, importation and insured activities
Tell us whether you manufacture, import, distribute or supply products under your own brand, including any outsourced work. We can discuss how these activities are described in the insurance offered.
If a customer asks for particular insurance limits or additional insured status, we can consider the options available from insurers. Contract interpretation, drafting and negotiation remain matters for your legal adviser.
Consideration 03
Overseas sales and insurance territory
Let us know where your products are sold, including any US or Canadian sales. We can discuss territorial and jurisdiction limits, defence costs and insurer acceptance for those markets.
Insurance terms do not determine the legal or regulatory requirements for trading overseas. Your legal or regulatory adviser can help with those matters.
Consideration 04
Recall, software and the product lifecycle
Product recall insurance is not the same as products liability. The trigger may require a specified risk of bodily injury or property damage, and cover for tracing, withdrawal, testing, replacement and reputational costs may have separate sublimits. A voluntary withdrawal or performance problem may fall outside some wordings.
Connected and software-enabled devices raise additional questions about cyber incidents, software updates, data integrity and whether the policy treats the technology as a product or a service. We also revisit cover as a device moves from prototype to clinical investigation and then commercial distribution.
How losses can arise
Illustrative claim scenarios
These examples show issues to discuss with an insurer. They are hypothetical and are not claims paid by Mercantile or a promise that a policy will respond.
Incorrect diagnostic result
A diagnostic device gives an inaccurate reading. A patient alleges injury, while a customer claims the cost of repeating tests. The bodily injury and financial loss elements may require different insuring clauses.
Device withdrawal
A potential defect is discovered in a supplied device and the company must locate and withdraw affected units. The recall trigger, expenses, deductible and any replacement-cost sublimit need review.
Distributor contract
An overseas distributor requests a particular insurance limit or US cover. The supplier asks its broker about available policy options and its legal adviser about the agreement.
Preparing a review
What we will ask about
A clear account of the business helps insurers quote accurately and helps us compare the terms that matter most.
- Product description, intended use, whether it is invasive, implantable or used for diagnosis, and its development stage.
- Manufacturer, brand owner, importer, distributor and service-provider roles, including subcontracted activities.
- Annual revenue by product and country, with US or Canadian sales identified separately.
- Regulatory status and relevant quality processes, incident history and any previous withdrawals or recalls.
- Key customer, manufacturer and distributor contracts, requested limits and indemnity clauses.
- Current insurance schedule and wordings, claims history and any planned product or market changes.
Common questions
Frequently asked questions
Does ordinary public liability cover medical devices?
It may address some third-party injury or property damage claims, but medical device activities and product classes must be disclosed. Product failure causing pure financial loss, recall costs and professional services often require separate consideration.
Do importers need insurance if the overseas manufacturer is insured?
An Australian importer or distributor may be named in a product claim. The overseas manufacturer’s policy should not be assumed to insure the Australian business. We can discuss its own policy cover; legal duties and supplier agreements belong with its legal adviser.
Does products liability pay for a recall?
Usually not simply because a product is being withdrawn. Recall expenses generally need a specific insuring clause or separate policy, and the trigger and covered costs should be checked.
Can a policy include sales to the United States?
Potentially, depending on the product and insurer. The territory, jurisdiction, limit, defence-cost treatment and any US exclusions must be explicitly reviewed.
What changes when a device goes from testing to market?
Commercial supply, new contracts, broader territories and higher sales volumes can materially change the exposure. The insurance programme should be reviewed before launch.
Medical device sectors
Explore insurance for your product category
Choose your sector for specific liability, recall and service risks to consider.
Review your cover
Discuss insurance for your business.
Tell us what you do, where you operate and what your customers or partners require. Consider existing cover or approach suitable markets for a new programme.
Start an enquiryGeneral insurance information only. Cover is subject to underwriting, policy terms, conditions, exclusions, limits and deductibles.