Freezer malfunction signals warning to R&D companies
After a recent freezer malfunction at Harvard-affiliated McLean Hospital in Belmont caused severe damage and decay to a collection of the world’s largest autism brain samples, scientists have been left with a devastating loss that could potentially set their research back years. The freezer’s alarm failure halted numerous critical medical studies. While the cause of the malfunction remains under investigation, there is still much that can be learned from this incident.
It should also be mentioned that the setup at Harvard Brain Tissue Resource Center (HBTRC) served as a classic example of risk management and loss control. There were duplicate brain samples – 52 of which were bisected with one side stored in formalin, the other side in the freezer. With temperature gauges and two alarms to notify staff if there were any malfunctions, the freezer seemed well equipped and safe for storage. Unfortunately, as this situation shows, sometimes even the best laid plans do not work.
How can HBTRC and other research facilities recover from a loss of this magnitude? Several insurance products exist that would mitigate the loss to the facility, but the results of the investigation will determine whether or not these types of coverage would apply in this particular incident. However, R&D operations, research facilities or any company with valuables in special storage should be checking their insurance policies to ensure that their policy addresses these unique exposures. Some of the questions worth asking include:
- Does your policy cover Mechanical Breakdown
- Besides covering the repair or replacement of the machinery, does it extend to cover consequential or ensuing damage? If yes, what is the limit?
Coverage for a loss due to spoilage or change in the environment needs to be specifically added and often has a sublimit applied. Keep in mind that the coverage rules and what constitutes a spoilage loss can vary by insurance company. Loss of Research coverage is intended to pay for the time and materials to recreate experiments and research that was destroyed by a covered loss, but again, each insurance company has its own form of coverage. R&D companies should also consider purchasing Business Interruption coverage, which pays for lost income and/or continuing expenses after a loss.
As the HBTRC accident proves, these types of accidents occur unexpectedly and even when precautionary measures are in place.
About the Author
Mindy Evanter is a Senior Vice President at William Gallagher Associates with over 25 years of experience, specializing in designing risk management and insurance programs for life sciences companies.