Despite the name, test laboratories are not limited to working in a sterile lab setting. In fact, nonmedical test labs may perform all kinds of complicated testing in the field or wherever a project takes them.
Because of the diverse and unique nature of the work, along with the dangers of working on- and off-site, a test lab needs business insurance to protect the business and its employees wherever they may be.
And mistakes or negligence can be the biggest danger of all. If you are sued because of errors in the services you provide — or fail to provide — your reputation and financial stability can be permanently damaged or destroyed.
Test labs typically perform physical, chemical and other analytical testing and consulting services for a variety of clients. Testing may include the following:
- Acoustics or vibration testing
- Assaying (determining the quality or content of a metal or ore)
- Biological testing (except medical and veterinary)
- Calibration testing
- Electrical and electronic testing
- Geotechnical testing
- Mechanical testing
- Nondestructive testing
- Thermal testing
Some firms may also provide ground water analysis, waste and wastewater analysis, air quality analysis, hazardous waste site work and hazardous waste testing. This work is often done on-site or in mobile laboratories.
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While the work varies from project to project, one thing is constant: the need for tailored, comprehensive business insurance to help protect the business from the complex hazards it faces.
Coverage Overview for Test Laboratories
Test labs need a variety of insurance policies to protect against the risks to property and individuals that they face every day. You can purchase individual policies from an independent insurance agent, and in some cases, you can purchase packaged policies to meet your needs.
An insurance agent can get to know you and your business and can work with multiple insurance companies to find the best fit your needs and budget.
Here are some laboratory insurance policies that you will likely need.
- Commercial property insurance protects test labs from the costs associated with physical damage to equipment and property at their business premises. This type of coverage reimburses you if your building and its contents are damaged or destroyed by fire, smoke, hail, wind, vandalism, theft and other unforeseen causes of loss.
- Commercial property policies, which may also include coverage for business interruption, helps you pay for continued expenses if you cannot operate for a period of time after a covered loss.
- Commercial general liability is an essential business insurance policy for any business owner. It protects you if you or an employee damages another person’s property or injures a third party. It covers the costs associated with lawsuits, including your legal defense, court costs, settlements and judgments.
Special Considerations for Mobile Test Labs
Mobile test labs perform testing off-site and in the field. This presents a unique set of risks beyond what are present for a permanent lab facility.
The mobile test lab van or truck and the equipment inside of it are irreplaceable. It is susceptible to break-ins, accidents, vandalism, theft, weather events and more. You need insurance coverage to protect your mobile test lab vehicle and equipment.
- Commercial auto insurance protects your mobile test lab vehicle in the event of accidents and other collisions (e.g., if you hit a mailbox, if a tree falls on the vehicle, etc.), theft, vandalism and weather events (e.g., hail, windstorm). It pays for repairs to your vehicle as well as medical bills, legal fees, settlements and judgments that you are required to pay.
- Inland marine insurance is important for any firm that transports expensive equipment in order to do a job. If you transport lab equipment from project to project, you need coverage for that equipment while it is not on your business premises. Inland marine coverage protects tools, equipment and supplies that you bring off-site; commercial property and commercial auto policies typically exclude coverage for those items once they leave your business premises.
Laboratory Professional Liability Insurance
Imagine the consequences if your lab were to provide faulty test results or flawed analyses or were to mistakenly swap client results. Any mistake you make can cause substantial financial and even physical injury to a client or other third party.
If you don’t have the right insurance coverage, a lawsuit could ruin your reputation and your livelihood. Even your personal assets could be at risk.
Professional liability insurance, or errors and omissions (E&O) insurance, is an essential policy that no professional services firm should go without. If you make a mistake or are somehow negligent in the services you provide — causing harm to a client or someone else — you can be sued and held liable for damages.
Your test laboratory professional liability policy should be tailored to your unique exposures and written to address the specific risks your business faces. In general, it protects the insured business in the event that it is sued for negligence or mistakes in its work.
If you are sued, your legal defense, court costs and attorney fees are your responsibility even if the lawsuit is unfounded. If you are found liable for damages, you may also have to pay settlements or court-ordered judgments.
Your E&O policy can cover most of these costs and protect you from the financial devastation that just one lawsuit can bring.
What Does Professional Liability Insurance Cover?
Professional liability insurance provides protection for you if a client sues you for negligence or other wrongdoing related to your work. It provides coverage in these cases:
- Actual or alleged errors
- Professional negligence
- Breach of duty
- Misleading statements
- Claims resulting from the performance — or nonperformance — of professional services
Coverage is excluded for instances of intentional wrongdoing or illegal acts.
Talk to Your Agent About Other Coverage for Test Labs
Test laboratories might need other business insurance policies, including the following:
- Workers’ compensation insurance is typically required for any business that has employees, and pays for lost income and medical expenses for employees who sustain work-related injuries.
- Employment practices liability coverage protects you from employee lawsuits related to discrimination and other employment-related business practices.
- Business auto insurance covers your company’s vehicles and drivers (cars, SUVs, vans and trucks) that are damaged or injured in a collision or some other type of event. If your employees drive personal vehicles for business purposes, you must have nonowned or hired auto liability coverage to protect your company from accident-related costs.
- Commercial umbrella insurance provides excess liability protection to any of several other policies you might have, including commercial general liability, employer’s liability, and hired and nonowned auto liability. By purchasing one commercial umbrella policy, you essentially get higher limits on all of those policies rather than having to raise the limits on each policy individually. Commercial umbrella insurance covers you when the limits of your other applicable insurance policies have been exhausted, protecting you in the event that a claim exceeds the amount of coverage available from any other applicable policy.
- Employee benefits, such as life, health and disability insurance, can help you retain and attract top talent and can help protect your employees from unforeseen life events.
You may also have additional risks if you handle certain chemicals or other toxic agents. You may need special protection from fires, chemical explosions, pollution and other accidents involving caustic or toxic chemicals or waste.
Your insurance agent can help you determine how to insure your business if you work with these dangerous substances.
How to Find the Best Business Insurance for Test Laboratories
If you need business insurance for a test laboratory, you need not look too far. Contact an independent agent. Our local agents can work with multiple highly rated insurance companies that specialize in businesses like yours.
Never settle for a one-size-fits-all approach. Work closely with your agent to assess your risks and to find the best tailored insurance solutions for your needs and budget. Find a local independent agent today.