What is Intellectual Property Insurance?

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If you are in the business of creating something, then you may know what intellectual property is. Primarily, it includes industrial design, trademarks, copyrights, patents, etc. Problems can arise because there may likely be someone else who is working on the same thing as you, and can sue you for infringement. Intellectual Property Insurance is a type of policy that will protect you and your business should you be sued for infringement. You may hear it referred to sometimes as patent insurance, although it covers much more than that. These days, there are thousands and thousands of these types of lawsuits filed, and can easily cost over a million dollars. Even if you take the usual precautions to protect your intellectual property, or valuable assets, by arranging for the proper patents or copyrights, you are still at risk for an infringement lawsuit.

Why You Should Consider 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.

What Does Intellectual Property Insurance Cover?

Intellectual Property Insurance is usually a part of Professional Liability, Cyber Insurance, and Media Liability. It covers things like trade secrets, patents, copyrights, trademarks, Product packaging, advertisements, and marketing ideas. There are two types of Intellectual Property Insurance policies, and they are sometimes written as one bundled policy, or separate depending on your individual needs.

  • Defense - Like we have been discussing within this entire article, the policy will defend your business for lawsuits brought against you for infringement. Attorney's fees, court costs, and any settlements awarded will be paid so that you can keep your business up and running and continue to turn a profit.
  • Enforcement - On the flip side, there is also Intellectual Property insurance to cover if you need to go on the offense against a competitor. The policy will provide the funds required to fight against a competitor that you feel has infringed upon your intellectual property. You will want to fight to get any missed profits if another business has indeed done so. The insurance company will help you do so, with underwriter approval.

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Frequently Asked Questions About Intellectual Property Insurance

  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.

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Running a business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right insurance gives you the peace of mind to focus on what matters - running your business.

The coverage you need depends on the type of business you run. A restaurant owner needs to be covered against customers possibly getting food poisoning while an accountant needs to be covered against calculation errors. CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business, get you a policy that fits your budget, and do it all in less time than you think.

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