Group of Eight Australia
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Module 8: Project Closeout

2.8 Indemnity and insurance

In the context of a research contract it is usual for certain provisions of an agreement to survive termination of the agreement. Typically these might include confidentiality, indemnities, publication, and even obligations to pay ongoing patent management fees. Such on-going obligations are clearly specified in the agreement.

Insurance and indemnity are linked because, if you indemnify an organisation against some action or event that might, for example, cause them economic disadvantage, then you will need to have the insurance cover to pay any damages. This is why agreements tend to specify the minimum level of professional indemnity insurance that should be in place. Such a requirement is a typical feature of Government contracts.

For contract research this is a particularly important consideration. The entity that is entering into the contract needs to consider not only the level of professional indemnity insurance that is required when the work is being done, but how far into the future such insurance is required. This is a point that is often not well understood or appreciated as one of the significant benefits of undertaking research through a major institution.

Other ongoing obligations relate to financial acquittals and the need for externally audited accounts. Subject to the terms of an agreement, it may be a requirement to have financial acquittals signed-off by an auditor. This can be time-consuming and costly. Funding agencies tend to make this a requirement so that the financial accounting is undertaken independently of the department where the research has taken place. In a university context this degree of independence would normally be achieved through the university's finance area.

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