Available in the specialty insurance marketplace, this insurance product is still very much in its infancy. The potential market, however, is seen as in the billions. IP coverage is associated with four general exposures: copyrights, trade secrets/ideas or practices, patents, and trademarks. Given the explosive internet growth, there is already a very significant dollar volume of litigation in play.

Policies currently available are entirely manuscripted, with nothing even approaching a standardized coverage form. The two broad categories of insurance consist of "Mitigation",
" Abatement" or some other similarly-termed designation, generally referring to legal expense to stop infringement by others; and conversely an "Infringement Defense" insurance covering legal expense to defend against actions alleging misappropriations. Keep in mind that these policies are essentially legal expense insurance only, and afford no other benefits of any kind. (Future versions may or may not include options for insuring first party types of financial loss, etc.)

These policies commonly specify a deductible and/or coinsurance feature, coinsurance typically being 20%. Their period-of-coverage features bear a vague resemblance to ordinary "claims-made" type insurance policies, in that they may or may not cover prior acts, and usually slam shut with regard to claims upon expiration or close of some discovery period. Underwriters typically require a specific scheduling of the properties to be insured (Patents, copyrights, etc.), and policies often contain rather onerous provisions for insurance company sharing in monetary awards received as judgments in successful actions. Underwriters may also impose any of numerous documentation requirements at the insured's expense as a condition of granting insurance.

 

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