In today’s technology-driven economy, intangible assets — such as software, proprietary databases, algorithms, large language models, designs and brands — have become central to corporate value, now exceeding $79.4 trillion globally. As the number of these assets grows faster than tangible ones, the risks posed by infringement, misappropriation, disclosure, counterfeiting and piracy have intensified. This makes IP insurance a critical tool for protecting innovation and enterprise value.
Intellectual property (IP) rights — including patents, trademarks, trade secrets and copyrights — are essential to the success of businesses that rely on technology to deliver goods and services. Yet, many companies remain unaware that standard insurance policies often exclude coverage for key IP exposures such as patent infringement and trade secret misappropriation. Even coverage for trademark, trade dress and copyright infringement may be limited under traditional insurance lines.
As highlighted in our previous article, Exploring the current intellectual property (IP) insurance landscape and its growing significance, IP insurance has evolved from a niche offering to an essential component of enterprise risk management, helping mitigate the financial exposure associated with IP risk.
Purchasing IP insurance is a strategic decision. To maximise its value, businesses must first understand their unique IP risk profile to identify the relevant exposures and categories of loss covered by IP insurance. This involves assessing:
To support this, Willis, a WTW business, has developed an IP Risk Scorecard that helps clients identify exposures and determine whether IP insurance is appropriate. Recoginising that IP risks vary by sector, we've tailored scorecards for industries such as:
Historically, applying for IP insurance has been complex and time-consuming. Willis has simplified this process by creating a standard IP insurance application accepted by all major IP insurers — a short form application for entities below $250 million in revenue, and a longer form application for larger, more complex entities. This standardised approach reduces friction and accelerates underwriting.
IP insurance continues to evolve, offering broader coverage across various exposures, including:
As the market has matured and insurers’ IP insurance portfolios have grown, pricing has become more competitive — typically ranging from 1 – 5% of the purchased limit, depending on:
Software companies typically provide contractual IP infringement indemnities to their business customers. What insurance coverage does a software company have to address the situation where 15 of its customers are sued for patent infringement by a non-practising entity, and all 15 customers make indemnification demands on the software company?
Tech E&O insurance is primarily designed to protect against claims from clients or end-users related to the performance of services. While such policies state that they cover IP infringement claims, the policy exclusions reveal that patent infringement is excluded.
Commercial general liability (CGL) insurance typically covers copyright and trademark infringement related only to advertising injury, such as promotional materials, marketing content, or commercials. In addition, patent infringement and trade secret misappropriation are expressly excluded from coverage. Moreover, CGL policies often have geographic limitations and don't cover international jurisdictions.
IP insurance offers coverage for all categories of IP violations, as well as costs to enforce the insured’s IP rights and to defend the insured’s IP rights against legal challenges.
If the software company faced with 15 patent infringement indemnity demands has an IP policy in place, then that policy may cover its legal expenses and settlement costs related to the indemnity demands. What is the value of the coverage? Assuming the software company paid $25,000 for a $2,000,000 limit policy with a $50,000 per claim retention, total legal expenses were $60,000 and total settlements paid were $200,000, then the total cost incurred by the software company would be $75,000 (premium + retention) versus $260,000 (legal expenses + settlements).
Coverage for these exposures supports the continued operation of your products, services and business activities and protects your balance sheet. Other advantages to having IP insurance include:
To make sure you have the right IP insurance, you need to know what your risk profile is and what the policy rules are. We work closely with clients and insurers to tailor coverage that aligns with each client’s unique needs. Additionally, we coordinate with colleagues across other insurance lines to ensure all policies work together seamlessly, maximising IP protection.
Companies can no longer solely rely on the advertising injury clause of their general liability policies or even tech E&O and media liability policies to fully protect against IP exposures. Coverage is narrowing:
IP insurance is vital for closing these IP exposure coverage gaps. In addition, IP insurance can serve as excess coverage over IP exposures that other policies partially address.
Today, technologies — from AI-enabled chatbots and robotic surgery to Global Positioning System (GPS) and Internet of Things (IoT) — are integrated into nearly every product and service. Organisations’ value is no longer primarily property, plant and equipment. Instead, it's intangible assets, such as software, algorithms, proprietary databases, and designs, and the IP rights protecting those intangible assets.
IP insurance is no longer optional. It is a strategic necessity for businesses aiming to grow while safeguarding their most valuable assets.
