The entrepreneurial scientist who needs insurance for a start-up, high-technology business--especially in biotechnology or hazardous waste remediation--may find that liability coverage is hard to get.

The reasons are simple. "Insurance is a business that depends on the status quo and experience," says Peter Huber, a senior fellow at the Manhattan Institute, a New York-based think tank, and a critic of the liability system. It's no wonder that life insurance, with its rich data bank on mortality, is a such a good business.

Death is what an insurance company would refer to as a "frequency exposure": many losses of a predictable amount. On the other hand, companies in fields such as biotech present a much higher level of hazard, a "severity exposure," to insurance companies because losses tend to be few, but catastrophic.

Biotech is a new field, and that works against it from an insurance standpoint, according to Lyn Rossano,...

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