What is Intellectual Property Insurance?

According to a recent report there are over 12,000 intellectual property cases filed in the United States every year. Given this statistic alone, the risk that you will have to participate in an infringement lawsuit is rather high. Even if you simply have to defend yourself, and are found not guilty, you still have to pay for that defense. Intellectual Property Insurance is there to make sure you don't have to worry about bankrupting your business, or taking out another mortgage on your home, to defend yourself. With the business world becoming more competitive with every passing second, it is critical that you protect yourself from this litigious industry.

Let's say you do have the unfortunate luck of being sued by a competitor for infringement and you are found guilty. Most likely, the judge will award the competitor for lost profits. Imagine the dent that would put into your bank account if you did not have the proper insurance coverage in place to cover such a judgment.

1. Where can I get Intellectual Property insurance? As you can imagine, with the immense number of infringement lawsuits filed every year, it is a high risk for insurance companies. There are two that specialize in this type of insurance and may be the best for you to talk with if you need it. Intellectual Property Services Insurance Corporation has been doing this since 1990 and has excellent Intellectual Property insurance products and a team of educated advisors. Another great company at the tip of the list is Willis Towers Watson who has several options now that they have merged and have some unbeatable core values.
2. What are some factors that the insurance company takes into consideration when underwriting? The underwriting process may be more rigorous than traditional insurance policies due to the risk. Some things they will consider include profitability of the item being patented, the capital investment initially made any active licenses, ongoing disputes, and suspicions of any infringements.
3. How much is Intellectual Property insurance? While each insurance company is going to have different products and rates, we can give you an idea of minimum costs. If you need the standard defense policy, you can plan on paying at least $2,500 annually. If you want to package both the defense and enforcement that will start around $3,000. While looking at these numbers may seem like a lot initially, remembering that the majority of infringement lawsuits cost over a million, it certainly puts it into perspective.
4. What are the exclusions I need to be aware of? It is always best to read your policy and discuss what is included and excluded from every insurance product you purchase. However, for Intellectual Property insurance policies, keep your eyes out for exclusions that include: Willful infringement, Fines and Penalties.