Indemnity Clauses In Clinical Trial: What Insurers Look For

What’s in this article

You’re reviewing a CRO contract, a clinical site agreement, or a vendor template, and the indemnity section runs to three dense paragraphs with terms like “defend, indemnify and hold harmless” and phrases about “any and all losses.” Your broker needs to know if it’s insurable. Your legal team wants to know if it’s reasonable. You need to know if signing it will spike your premium, create coverage gaps, or cause problems when a claim arrives.

This article shows you what indemnity clauses in clinical trial underwriters actually scrutinise, compares common clause structures that work against those that create friction, and gives you the practical language to negotiate indemnity clauses in clinical trial that aligns with insurance programmes. It’s written from the underwriting side what makes a clause insurable and what makes it a red flag.

What do underwriters actually examine in indemnity clauses?

Underwriters assess whether indemnity clauses in clinical trial obligations can be priced, covered and defended. They’re looking for three things: proportionality, specificity and fault allocation.

Proportionality: Does the clause allocate risk to the party that controls it? Forcing a small clinical site to indemnify you for systemic protocol design failures is disproportionate, they don’t control protocol design, they can’t prevent that risk, and they likely can’t insure it.

Specificity: Is it clear what triggers the indemnity? Vague language like “any loss arising from or related to” creates ambiguity. Underwriters can’t price ambiguity, so they either exclude it, load the premium, or decline the risk entirely.

Fault allocation: Is the indemnity tied to negligence, breach of duty or regulatory non-compliance, or is it a no fault absolute promise? Fault-based indemnities align with insurance policy triggers. No fault indemnities often don’t.

What creates immediate underwriting friction for indemnity clauses in clinical trial:

Unlimited financial exposure with no caps.
Indemnities for risks the indemnifying party doesn’t control.
Blanket “defend, indemnify and hold harmless” language with no defined scope.
Clauses requiring indemnification for the other party’s own negligence (joint fault scenarios).
Missing fault or causation requirements.

How do common indemnity clauses in clinical trial structures compare and which are insurable?

Trial contracts typically use one of four indemnity models. They vary significantly in insurability.

Model 1: Mutual fault-based indemnities (most insurable)

Clause structure:
“Each party shall indemnify the other for losses caused by that party’s negligence, breach of this agreement, or failure to comply with applicable law in the performance of its obligations under this agreement, up to a specified limit or insured policy limits.”

Why this works:

Fault-based: tied to negligence or breach, which aligns with professional indemnity and liability policy triggers.
Mutual: both parties accept proportional risk for what they control.
Capped: limits exposure to a defined amount, making it quantifiable for underwriters.
Specific: clear causation requirement.

Underwriter response:
This structure typically prices at standard rates. It’s clear, proportional and matches policy wording. The reciprocal meaning of “each party shall indemnify the other…” signals a balance of power in the relationship and other so the emphasis shifts to other elements of the contract.

Clause structure:
“CRO/Site shall indemnify Sponsor for all claims arising from CRO/Site’s performance of services under this agreement, except where caused solely by Sponsor’s negligence.”

Why this creates friction:

“All claims arising from” is broader than “caused by negligence.”
It can capture claims where the CRO/Site had only partial involvement or no fault.
The “except where caused solely” carve-out is narrow, it doesn’t protect the CRO/Site in joint fault scenarios.

Underwriter response:
Professional indemnity insurers scrutinise this closely. They may add endorsements excluding indemnity for third-party acts, load the premium, or require the clause be amended before providing cover. The CRO/Site is being asked to insure risks beyond their direct control.

Model 3: Uncapped blanket indemnity (often uninsurable as written)

Clause structure:
“Vendor/CRO agrees to defend, indemnify and hold harmless Sponsor, its officers, directors, employees and agents from and against any and all losses, damages, liabilities, costs and expenses arising out of or related to Vendor/CRO’s activities under this agreement.”

Why this is problematic:

Uncapped: “any and all” with no financial limit.
“Arising out of or related to” is extremely broad and includes indirect causation.
“Defend” obligations can require funding defence costs before fault is determined.
Covers the sponsor’s own personnel (“officers, directors, employees”) for their actions.

Underwriter response:
Many professional indemnity policies explicitly exclude uncapped indemnities. Underwriters will either decline to cover this clause, severely load the premium, or require it be capped and narrowed before providing cover.

This clause is routinely included in sponsor template contracts but is often uninsurable for the CRO or vendor without amendment.

Model 4: Comparative fault allocation (sophisticated, insurable)

Clause structure:
“Each party shall indemnify the other to the extent of that party’s proportional fault as determined by a court of competent jurisdiction or agreed between the parties’ insurers, for losses arising from trial activities under this agreement. Neither party’s liability shall exceed [a specified cap].”

Why this works well:

Proportional: allocation reflects actual fault.
Capped: defined financial limit.
Flexible: allows settlement negotiation between insurers.
Realistic: acknowledges that many trial incidents involve shared fault.

Underwriter response:
This structure is favoured by underwriters because it’s realistic and defensible. Multi-party trial incidents rarely have single-cause fault. Proportional allocation allows insurers to negotiate contribution without protracted litigation.

What specific indemnity clauses in clinical trial triggers underwriting red flags?

Certain phrases immediately signal insurability problems.

This language vastly expands scope beyond direct causation. A participant injury “related to” a CRO’s monitoring activities could include injuries the CRO had no ability to prevent.

Better alternative:
“Caused by” or “directly resulting from” creates a clearer causation standard that aligns with policy triggers.

Red flag: “Any and all losses”

Uncapped and undefined. Underwriters can’t price unlimited exposure.

Better alternative:
“Losses up to the limits of the indemnifying party’s insurance or [specified amount], whichever is greater.”

Red flag: “Including for the other party’s own negligence”

This asks one party to insure the other party’s fault. Most liability policies exclude this, you can’t insure someone else’s negligence as if it were your own.

Better alternative:
“Excluding losses caused by the indemnified party’s sole negligence or wilful misconduct.”

Red flag: “Defend, indemnify and hold harmless”

“Defend” creates an obligation to fund legal costs before fault is determined. This can be expensive and may not be covered if the claim is ultimately outside policy scope.

Better alternative:
“Indemnify” alone, or specify that defence obligations are subject to coverage under applicable insurance and reasonable cost approval.

How do indemnity clauses in clinical trial interact with insurance policy terms?

Even well drafted indemnity clauses in clinical trial can create coverage gaps if they don’t align with policy wording.

Timing issues:
Many professional indemnity policies are written on a “claims-made” basis, they respond to claims made during the policy period, not incidents that occurred during the policy period. If your contract indemnity obligation extends beyond your policy period, you have a gap.

Scope mismatches:
If your contract requires you to indemnify the sponsor for regulatory penalties but your professional indemnity policy excludes fines and penalties, you’re self-insuring that exposure.

Subrogation conflicts:
Some policies limit or waive insurer subrogation rights, the ability to recover from third parties after settling a claim. If your contract assumes your insurer will pursue the manufacturer after settling a contamination claim, but your policy waives subrogation, that recovery won’t happen.

Prior acts exclusions:
If you’re contracting for ongoing services but your policy has a prior acts exclusion (doesn’t cover claims arising from work done before the policy started), and your contract indemnity covers all prior work, you have uninsured exposure.

Practical step: before signing contracts with indemnity obligations, have your broker review the clause against your current policy wording. Identify gaps, negotiate amendments or arrange supplementary coverage.

What should sponsors and CROs actually negotiate?

Negotiation isn’t about eliminating indemnities, it’s about making them proportional, specific and insurable.

Sponsors should push for:

Clear fault-based triggers tied to negligence or breach.
Caps at reasonable multiples of contract value or insured limits.
Evidence of appropriate insurance from CROs and vendors before work begins.
Named insured or additional insured status on vendor policies where appropriate.

CROs and vendors should push for that support indemnity clauses in clinical trial:

Proportional fault allocation, not absolute liability.
Exclusions for sponsor-controlled risks (protocol design, investigational product defects).
Caps that align with their insurance limits.
Clarity that defence obligations are subject to insurance coverage and reasonable cost controls.

Both parties should ensure:

Indemnity obligations match insurance policy scope and limits.
Subrogation and contribution rights are clearly stated.
Notification and cooperation obligations are realistic and specific.

What works in practice: exchange insurance certificates and policy summaries during contract negotiation. If the indemnity clauses in clinical trial requires £5 million cover but the vendor only carries £2 million, negotiate the cap down or require additional coverage.

How do indemnity clauses in clinical trial affect insurance placement and pricing?

Underwriters assess your contract portfolio during placement. Problematic indemnities increase premiums or narrow coverage.

What increases premiums:

Multiple contracts with uncapped indemnities.
Asymmetric indemnities where you accept disproportionate risk.
Indemnities for risks you don’t control (product defects when you don’t manufacture; protocol design when you’re just a site).
Missing insurance evidence from counterparties.

What reduces premiums:

Consistent use of proportional, fault-based indemnities across contracts.
Clear caps aligned with your insurance programme.
Evidence that vendors and CROs carry appropriate cover.
Documentation showing you review and negotiate indemnity clauses systematically.

Practical consequence: a sponsor with ten CRO contracts containing well drafted, proportional indemnities will get better terms than a sponsor with three contracts containing vague, uncapped blanket indemnities. Underwriters reward systematic risk management.

Practical checklist: reviewing indemnity clauses in clinical trial before signing

Before signing a trial contract with indemnity provisions, check:

Is the indemnity fault-based? Tied to negligence, breach or non-compliance?
Is there a financial cap? Defined limit or reference to insured limits?
Is scope specific? Clear causation language, not “arising from or related to”?
Does it match your insurance? Broker confirms the obligation is covered under your current policy?
Is it proportional? Are you indemnifying for risks you actually control?
What about defence costs? Are you required to fund legal costs before fault is determined?
Subrogation clarity? Does the contract allow your insurer to recover from third parties?
Insurance evidence required? Does the contract require the other party to provide certificates?

If the answer to any of these is unclear or unfavourable, negotiate before signing or arrange additional insurance to fill the gap.

Bottom line for indemnity clauses for clinical trial

Indemnity clauses in clinical trial contracts allocate risk, create insurance obligations and determine who pays when incidents occur. Well-drafted clauses are proportional, fault-based, capped and aligned with insurance policy terms. Poorly drafted clauses are vague, uncapped, asymmetric and uninsurable.

Underwriters scrutinise indemnity obligations during placement. Problematic clauses increase premiums, create coverage gaps or get excluded entirely. The practical approach: negotiate indemnities that reflect who controls risk, match them to insurance programmes, and document that alignment before work begins.

When claims arise, your contract indemnities determine whether you’re fully covered, partially exposed, or left self-insuring risks you thought were transferred. The quality of those clauses, and their alignment with insurance, matters far more than most sponsors realise until a serious adverse event occurs.

External Resources

National Institute for Health and Care Research (NIHR) Model Clinical Trial Agreements. Standardised UK contract templates showing recommended indemnity structures.
Contracts and Commercial Law Act (NZ) or equivalent contract law resources. Legislative framework for indemnity interpretation (Commonwealth jurisdiction example)