March 15, 2011

2011 Insurance Seminar

Penn Biotech Group

SECTION I.

“Insurance 101 For a Start-up”

Presented by Cohen Partners LLC: Barry Cohen Karl Janssen

Success!

!!

As a startup, you have a million things to think about. Insurance is often overlooked.

YIKES!!!!

“ I should have reviewed the contract with both my legal and insurance professionals before executing!”

Avoid the financial

black hole of

having unknown

insurance costs

for customer

requirements!

So the question is…..

What types of insurance do I need for my startup?

Typical Insurance Coverage Required by VC Firms and/ or

Customers

General Liability (Public Liability)

Professional Liability/ Errors & Omissions

Directors & Officers Liability

Workers Compensation

Required once your company starts payroll

General Liability(Public Liability)

Legal Liability coverage for bodily injury/ property damage resulting from accidents on your premises or use of your product

Professional Liability/ Errors & Omissions

Coverage for claims from programming errors, software performance, or the failure of your work to perform as promised in your contract.

Directors & Officers Liability

Financial protection for the directors & officers of your company in the event they are sued in conjunction with the performance of their duties as they relate to the company

Other Suggested Coverages

Property Insurance including Business InterruptionEmployment Practices LiabilityCyber Liability/ Network Security

Contract/ Insurance Pitfalls to Avoid

“One Sided” Indemnity

Agreements

Improper Risk Transfer

Unreasonable Limits of Insurance

“One-Sided” Indemnity Agreements

Client may ask you to assume liability for their negligence

Proper Agreement will limit your liability to the extent your firm is negligent.

“One Sided” Indemnity Agreements are often uninsurable!

Improper Risk Transfer

Does your agreement with your independent contractors or subcontractors clearly state that they are not employees?

Does your independent/subcontractor agreement include hold harmless language in your favor?

Does your independent/subcontractor agreement require that they carry liability insurance with your firm listed as an additional insured?

Unreasonable Limits of Insurance

Frequently the result of an inexperienced lawyer or risk manager!

Limits required should be commensurate with risk and size of contract!

Conclusion:

Consult with your insurance professional before signing the contract!

Improper risk transfer can cause your company to assume unnecessary liabilities and lead to disastrous results.

Discuss with your insurance agent what coverages you need for your company’s current stage of development.

Thank you!