Intellectual Property Liability Insurance

We all dream about the million-dollar idea that sets us up for life. The largest companies and most impressive innovations all started as just an idea in someone’s head. Although it’s not a tangible object, an idea holds an impressive amount of value. But how do you protect your idea? Getting a patent is one of the first steps to securing ownership, but it doesn’t always guarantee protection. Intellectual property liability insurance is one way to insure your business's original concepts.

Luckily, a local independent insurance agent can help you get set up with the right intellectual property liability insurance. They'll get you matched to the ideal amount of coverage to protect your ideas and other intellectual property quickly. But until then, here's a closer look at intellectual property liability insurance, what it covers, and when it's necessary.

What Is Intellectual Property Liability Insurance?

Intellectual property (IP) liability insurance is sometimes used interchangeably with patent infringement insurance, but they're not exactly the same. Intellectual property liability coverage is part of a professional liability insurance policy. 

IP liability insurance is designed to cover lawsuit costs due to the infringement of copyrights, patents, and other forms of intellectual property. However, not all IP policies are designed to cover patent infringement lawsuits.

What's the Difference Between Intellectual Property Liability Insurance and Patent Infringement Insurance?

Though intellectual property liability insurance can cover patents along with many other types of IP, not all policies cover patent infringement claims and lawsuits. Patent infringement insurance is meant to protect you, as the patent holder, in case someone infringes upon your patent and causes you a business loss. 

Patent infringement insurance is more of a liability policy for manufacturers. If a company is accused of infringing upon someone else’s patent, the patent insurance policy will cover the legal costs associated with the accusation. 

While this type of policy may seem unnecessary if you don’t plan on stealing someone’s idea, patent infringement is more common than you may think. Although your intentions may have been non-threatening, a patent holder still has the right to sue you for losses. There are two types of patent infringement insurance:

• Defensive policy: This will assist you if you’re sued for infringing upon a patent.
• Patent litigation insurance: This will cover your legal costs if you must sue someone else for patent infringement.

Although companies aren’t required to purchase both types of patent insurance, it’s a more comprehensive policy approach. If you aren’t sure whether you need both policy types, contact an independent insurance agent.

What Does Intellectual Property Liability Insurance Cover?

An IP liability insurance policy can cover the cost of lawsuits, including attorney, court, settlement, and judgment expenses, related to claims of copyright, trademark, or patent infringement. This coverage can protect your business if it gets sued by a third party for claims of IP infringement, and it can cover costs if your company decides to sue someone else for a similar claim. 

If your business finds a third party, including another business, has used its IP without prior consent or permission, you can file an infringement lawsuit against them. In such a case, IP liability insurance can cover the legal expenses.  

Why Is IP Liability Insurance or Patent Insurance Necessary?

Intellectual property claims are becoming more common as businesses race to develop the next big idea. Your standard business insurance policy isn’t built to protect you from loss due to theft of your intellectual property or an accusation that you’ve infringed upon a patent. 

In the business world, it’s not necessarily important whether the idea was originally developed by you, but whether you can afford to defend the idea is exceptionally crucial. Obtaining a patent makes it yours, but if a large international company takes you to court for the right to your patent, will you be able to afford the legal fees associated with the case? 

Being a small or medium-sized business doesn’t mean you don’t need intellectual property insurance. Even multi-national corporations should start examining policies as their businesses continue to expand globally. Keep in mind that if you have an active lawsuit, you cannot apply for IP liability or patent insurance. It's wise to secure coverage before the need to use it ever arises. 

How Much Does IP Liability Insurance Cost?

Like most business insurance policies, IP liability insurance premiums are based on a variety of factors. Some of these can include:

• Your business's risk of related lawsuits
• Your business's practices
• Your business's annual revenue
• Your business's size and location
• Your business's prior claims history 

An independent insurance agent can help you find affordable intellectual property liability insurance near you.

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Here's How an Independent Insurance Agent Can Help

With the ever-changing nature of business, the need for insurance policies that grow with the business is considerable. When you work with an independent insurance agent, you have access to a variety of policies and insurance companies that understand the nature of business. 

Your agent can compare dozens of quotes for IP liability insurance and present you with only the results that offer the best blend of coverage and cost. And down the road, your agent can help you file business insurance claims or update your coverage as necessary.