Insuring Your Intangible Assets

A commonly overlooked risk management area for most companies is their intellectual property rights (IPR). Companies purchase insurance for their tangible assets such as buildings and equipment, but what about a company's intangible assets-the right to protect their creative efforts and the freedom to sell their product in the marketplace? According to some reports intellectual property can be a company's most important asset, accounting for as much as 80% of a company's valuation. Yet it is rare for companies to address IPR as a risk management issue. Virtually all general liability insurance policies now exclude coverage for intellectual property.

Fortunately, another kind of insurance coverage is available-IP insurance. There are four types of IP insurance that can help companies better manage risks associated with intellectual property. They are:

• Defensive IP insurance: Provides protection in the event your product is accused of patent, trademark or copyright infringement.
• Enforcement (Abatement) IP insurance: Provides capital in the event another entity is infringing on your intellectual property rights.
• First Party Riders: Provides coverage to pay you for loss of income, design around costs, etc. in the event your product is found to be infringing. 
• Representations and Warranty insurance: Provides satisfaction for indemnity agreements in contracts such as supplier agreements.