Do my current policies cover intellectual property?
Your current policies very likely offer some protection. A standard general liability policy often automatically covers claims over copyright, trade dress or slogan infringement in advertising. Errors and omissions policies, if properly constructed, can be broadened to cover common issues like software code copyright infringement.
Why do I need a special policy if my current policies already cover IP?
While general liability (GL) and errors and omissions (E&O) policies provide some protection, it is very limited. A general liability policy usually excludes coverage for copyright, trademark and slogan infringement if your firm is in the business of advertising or design. Errors and omissions insurance must have expanded IP coverage negotiated onto your form. If your current agent did not do this, your firm may not be adequately protected. Also, neither a general liability policy nor a errors and omissions policy effectually protects against patent infringement.
In short – GL and E&O policies are not designed to cover all potential claim scenarios your firm may face. Unique insurance may have to be purchased.
What type of expanded coverage is available?
We work with clients to both broaden existing coverage and explore the purchase of new policies. Most companies find it more cost effective to broaden current coverage than to buy stand alone policies, even though stand alone policies can offer the most expansive coverage.
Stand alone IP policies fall into two main categories; “defense” and “abatement”. Defense coverage provides defense and indemnification for your company if accused of infringing on a third parties intellectual property. Abatement policies provide your firm with funds to enforce your companies intellectual property through the costly litigation process.
Do Venture Capital/Private Equity buyers expect us to carry the coverage?
Most PE funds preform outsourced due diligence and will strongly penalize valuations for uninsured liabilities. Because you cannot insure a past event, putting coverage in place early will help maximize your firm’s value. Venture capital firms generally do not look at insurance closely but do look at potential risks, showing that your firm has done a risk assessment and properly insured known perils is a good step in gaining their confidence.
How is coverage priced?
All insurance premiums are determined by (rate)*(exposure). In the case of IP insurance the rate is determined by your industry and risk of claims, the exposure is generally projected revenue.
The more patents or trademarks your firm wants to protect and the more valuable the intellectual property is, the higher the insurance premium is likely to be.
How long does it take to put coverage in place?
Depends on the risk and type of insurance needed. Simple cases take a few days while the most complex can involve months of negotiations.
How many carriers are offering this coverage?
There hundreds of carriers that offer advertising injury claims under general liability policies, tens that offer errors and omissions insurance and less than five offering stand alone policies covering patent infringement.