Most businesses have insurance policies, such as revenue insurance and personal injury insurance, to protect themselves against damages. When considering to buy insurance for your business, Intellectual Property insurance is less common. This article explains why your business should consider purchasing this form of insurance.

What is IP Insurance?

It can be quite costly to register your particular form of IP, but that cost may increase even more when it comes to the point where you have to enforce the IP because someone has infringed your rights. IP insurance policies cover the costs of legal proceedings for IP disputes. This can be for:

  • Legal costs for enforcing claims against infringers – including damages for loss of profits or reputation, and can apply to any IP right locally or internationally; or
  • Legal costs for defending yourself against infringement claims – including any claims made against your clients, customers or licensees

What’s Covered Under IP Insurance?

In general, IP insurance will only cover IP that is specifically identified. This means that if you have started a new business and would like protection for that brand name, you will need to purchase a new policy or extend your existing coverage since the protection does not apply automatically.


As with all insurance, the insurer controls the payment of legal expenses and sets the limits as to what can be recovered. Initial conditions for insurance may be that:

  • Your insurer needs to be satisfied your case has a good prospect of success;
  • The amount will be capped, and your insurer may not fund unlimited legal expenses, depending on the specific policy you purchased;
  • Your insurer will have the right to withdraw funding under certain circumstances, such as if a reasonable settlement offer is rejected.

What Factors Should I Consider?

IP insurance is a highly specialised area. In determining whether or not you should purchase IP insurance, consider the following:

  • Likelihood of litigation. Is it likely that you will need to go to court over an IP-related matter? Is the industry that your business in particularly prone to litigation? In litigious industries, it may be prudent to just obtain IP insurance for defence.
  • Value of your brand. How valuable is your IP to your business? Has your brand become iconic? Generally, the longer your brand has been around and the better reputation you have achieved, then the more valuable your IP is. You might not need IP insurance when you started the business but decide to purchase it a few years down the line once your business has been properly established.
  • Level of coverage. How much coverage do you need? Perhaps purchasing a policy with less coverage or limited to your main products will be enough for your business? Consider purchasing a basic, limited insurance policy to act as a safety net to reduce the risk.
  • Self-funding options. Are you able to fund your litigation if necessary? What would the damage be to your business if you are unable to afford to enforce your rights? It is difficult to predict the amount you will have to pay for litigation as cases can range from thousands to millions, but having some amount in reserve to protect your IP is a good idea.

Key Takeaways

IP insurance policies will differ from insurer to insurer. As this is a highly specialised form of insurance, make sure your business has fully considered all factors before purchasing it.

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