Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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In a nutshell, Intellectual Property insurance covers a business against theft, with respect to business secrets, as well as patent and copyright infringement.

Usually the cover will indemnify the business for any lost profits, and has an option for endorsement, to cover any additional litigation expenses. This insurance cover is meant to protect the first party against theft, infringement, and invalidation.

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What is Intellectual Property

In order to understand what Intellectual Property insurance covers, one must first, understand the various categories of Intellectual property. There are four major categories of Intellectual Property, namely;

intellectual property insurance

Copyrights: Copyright gives you legal ownership over the works that you have created. These works may include paintings, photographs, poems, novels, and other literary works. The copyright law assures you of ownership over works that you have create. The kind of ownership granted by copyright law gives you various exclusively rights including: The right for reproduction of your work, the preparation of derivative works, the right to distribution of any copies from your work, the right to performance of any part of your work, and the right to publicly display your work, among others.

Patents: These cover any new inventions, with respect to machine, process, or technique. It may also apply to improvements on existing inventions.
Trademarks and Service marks: A trademark is a symbol, word, phrase, or design, or a combination of any of these, which can be used to identify or distinguish your business, as well as its products and services, from those of other businesses.
Trade Secrets: This includes any formulas, techniques, processes, patterns and any other information that gives a business an edge over its competitors, and therefore, the business may wish to keep it secret.
Trade-marks: Provide exclusive rights to word(s), symbols and designs to distinguish goods or services from others in similar marketplace.

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Types of intellectual property insurance cover

The are 2 main types of intellectual property insurance. The first type covers your business, just in case you are accused of infringement, and covers your litigation expenses. The other type of business insurance is referred to as the ‘pursuit’ policy, and it covers your litigation expenses, if you sue another party for alleged infringement.

Do you really need Intellectual Property insurance?

The advancement in technology has seen many businesses develop new applications and processes, as well as embrace technology in their day-to-day operations. This has seen companies compete to invent new ideas and products that will give them an edge in their business.

The risk of infringement always exists, as you may unknowingly infringe on someone else’s intellectual property or idea. On the other hand, other parties may infringe on your intellectual property or idea.

Intellectual property insurance will help you to protect your innovations from competitors, who may knowingly or unknowingly, try to claim the rights to the same application, process or business model. You can apply for the insurance cover, provided you are not aware of any violations or infringements on your patent or trademark.

However, for you to be eligible for cover, you must first, file a registration for your copyright, trademark, or patent, or complete an Intellectual Property search. You may purchase the insurance cover, as a stand-alone cover, or together with a Technology Errors and Omissions Liability.

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The Different Kinds of Intellectual Property Insurance Products

Below is a brief look at the various Intellectual Property Insurance products and the kind of cover they offer.

  • Intellectual property insurance: This is the broad insurance cover that seeks to provide protection against infringement or violation on copyrights, trademarks, and patents.
  • Patent insurance: This kind of insurance cover protects your business against losses, just in case another party infringes on your patent.
  • Patent infringement liability insurance: This kind of cover is very important for manufacturers, distributors, and users. This professional liability insurance covers you from claims that may arise, when you unknowingly infringe on another party’s patent.
  • Advertising injury coverage: Usually, this is an additional policy comes with the commercial general liability policies. This cover protects your business against claims arising from statements in your advertising activities, which may inadvertently, lead to loss to another party.

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What does Intellectual Property Insurance cover?

The wording on the Intellectual Property Insurance cover policy will usually seek to cover the following areas:

intellectual property insurance

  • Litigation expenses that may arise in the course of defending your rights
  • Litigation expenses that may arise in the course of enforcing your rights
  • Litigation expenses that may arise in the course of defending your agreements
  • In case your defense is unsuccessful, the insurance cover will cover any damages that may be awarded to third parties, in relation to your infringement.
  • Cover the expenses that will be incurred in getting expert witnesses to testify on your behalf. In addition, it will cover any costs associated with attendance.

Do You Really Need Intellectual Property Insurance cover?

Does your business really need the Intellectual Property Insurance cover? You should ask yourself the following questions:

  1. If a third competitor were to steal your idea, application, business model or design today, would you have sufficient funds to hire the best lawyer or take immediate legal action?
  2. If a competitor were to claim that, you have violated or infringed on their intellectual property, would you have the resources to mount a legal defense against these accusations?
  3. If a licensee was to overstep the limits granted their license, would you have the resources to take the necessary action?

If your answer to any of the questions above is NO, then your business is at risk. You need to take the insurance cover to help you manage the cost of defending your Intellectual property.

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