Consider this, if you are a business owner, it is likely that your most valuable asset is not insured and therefore, at risk. You may be thinking this statement doesn't apply to you because you have a BOP that covers all your stuff and sky-high limits of liability coverage. In fact, you listened to your broker when he recommended an Umbrella and Professional Liability insurance. Nope, not me, you're thinking. But, what about your ideas? What about your intellectual property?

What is Intellectual Property (IP)

As defined by Merriam -Webster Dictionary, Intellectual Property is defined as: property (as an idea, invention, or process) that derives from the work of the mind or intellect; also:  an application, right, or registration relating to this.

Since we know what is considered IP, every business should make their best effort to understand the risk involved and choose the way to mitigate that risk at an affordable cost.

  • Identify - If your business manufactures products, sells products, or provides services unique to your competitor, then your business will have intellectual products at risk. From the restaurant that keeps recipes secret to a barber that provides a unique style of haircut, almost every business has IP at risk.
  • Quantify - Once you have identified the intellectual property that you own, you will need to place a value on it in order to determine how much money, if any, your business would lose if the IP became available to your competitors. In almost every case, a business owner's intellectual property is what makes it unique from other businesses in their class or industry. Once you have established the loss of money if the IP were lost or stolen, you can now set a legitimate value to it.
  • Protect - Now that you understand the value of your IP and how your business could suffer financially without it, it's time to make sure that your business transfers the risk of it being stolen or lost to an insurer. Having a product or work method under patent or trademark offers certain protections of ownership, but patents and copyrights do not provide a remedy if your IP is lost or stolen.

The Insurance That Is Needed

When we discuss the insurance needed to mitigate the risk for intellectual property, we should first look at the normal business owner's coverage and see if there is coverage already available.

  • Commercial General Liability - The CGL does provide some coverage related to intellectual property, however, the coverage is for 3rd party liability and doesn't protect your intellectual property.
  • Commercial Property - Commercial property insurance provides coverage for damage to or loss of tangible property. The policy does not speak to intangible property or intellectual property.
 Gibson Les Paul Guitar Patent - Blueprint

Gibson Les Paul Guitar Patent - Blueprint

Intellectual Property Insurance is the Answer

Fortunately, as the market demand has increased for IP insurance, several insurers have put together comprehensive insurance packages to meet the demand. One, in particular, is a product call IP. This product offers a comprehensive package of coverages to protect against IP claims. The product is targeted to small and medium-sized businesses and will provide the vital coverage needed with a litany of features:

  • Comprehensive coverage for all intellectual property, which includes patents, trademarks, copyrights, and trade secrets.
  • Provides for defending infringement allegations and payment of damages and settlement awards. The coverage will also extend to counterclaims, recalls, and other loss mitigation measures.
  • Coverage is provided for directors and company officers.
  • Provides coverage for contractual obligations for licensees and customers
  • Provides for the actual costs incurred when obtaining and maintaining a registered right if that right is invalidated or revoked resulting from an infringement action.
  • Reimburses for lost profits during a twelve month period if the insured is prevented from selling a product or service due to an infringement claim.
  • Coverage for the costs to avert or mitigate possible loss of reputation caused by an infringement action.

In today's litigious environment, the cost if intellectual property litigation can easily become astronomical and in some cases can cause financial devastation to an unprotected business. The risk of becoming involved in an intellectual property action continues to increase, and costs increase with it. Knowing this, it is completely understandable that certain insurers are developing comprehensive policies to allow your business to mitigate this risk.

The first step in searching for intellectual property coverage is to call the professionals at Skyline Risk Management, Inc. at (718) 267-6600 to get the information you need to navigate this very important coverage for your business.