general liability insurance Archives

General Liability vs. Professional Liability: What to Know

Consider this scenario: a client sues your company for inaccurate advice, or someone slips and falls at your workplace. Suddenly, you’re facing thousands of dollars in unanticipated legal fees—all as a result of a simple error or accident.

If you own a small business, protecting yourself from these dangers is critical. But do you know which form of insurance will protect you—general liability or professional liability? The answer could mean the difference between being fully insured and experiencing significant financial loss.

Let’s explore all you need to know.

What is General Liability Insurance?

General liability insurance (GLI) is a type of business insurance that protects against third-party claims involving bodily injury, property damage, libel and slander, advertising injury and reputational harm as a result of your business operation. General liability goes a long way in helping cover incidents by paying for legal defense and other court costs.

Key Examples

A customer slips on a wet floor in your shop and submits a claim for medical expenses.
You accidentally damage part of a client’s property while working on their site, resulting in costly repairs.
A competitor alleges you of using advertisements that damaged their brand, resulting in an advertising injury claim.

The Importance of General Liability for Small Businesses

Regardless of the industry that you’re in, general liability can greatly benefit your small business. By protecting your operation against the financial burdens associated with accidents, injuries, property damage, and more, your business will handle the unexpected with ease and remain successful into the future.

Who Needs General Liability Insurance

General liability is essential for the majority of businesses but particularly those with physical location, or if businesses that deal directly with clients face-to-face. Think about businesses that could face claims involving property damage or physical injury, such as restaurants, retail stores, and contractors.

What is Professional Liability Insurance?

Professional liability insurance, also referred to as errors and omissions (E&O) insurance deals with claims resulting from negligence, misrepresentation, or inaccurate advice provided by your professional service. Unlike general liability, which focuses on physical risks (explained in the above section), professional liability is meant to protect service-based businesses where mistakes or advice could lead to financial loss.

Key Examples

An architect makes a mistake in a building design, resulting in structural concerns and expensive repairs.
A consultant delivers poor business advice, resulting in financial losses for the customer.
An accountant makes an error in financial reporting, resulting in tax fines for the customer.

Who Needs Professional Liability Insurance?

Professional liability insurance is essential for service businesses that offer specialist knowledge or guidance. Consultants, accountants, architects, real estate brokers, and healthcare practitioners are more likely to face accusations of carelessness or error. This coverage protects them from financial loss as a result of errors or unmet client expectations.

Do You Need Both Types of Insurance?

Combining Coverages

In some cases, businesses will need both professional and general liability insurance. Luckily most insurance providers offer bundled coverage options where you can get both for a discounted price.

Here are a couple examples of business who benefit from both types of protection:

Contractors and developers often provide advice in relation to project planning. This presents a need for professional liability insurance. On the other hand, since these professionals perform physical work on people’s properties, a general liability policy is also necessary.
Someone who’s a graphic designer may want to invest in both types as they probably invite clients into their office from time to time, but also want protection against errors made in their physical work.

Cost of Not Having the Right Coverage

Without the proper insurance policy, your business risks major financial losses. For example, if you only have professional liability, and someone gets injured on your property, you’ll likely still have to cover their medical expenses out-of-pocket.

Or let’s say you have general liability insurance, but no professional coverage, and you make an error when giving consulting advice. Unfortunately with no professional liability, you may have to pay for the costs of a legal settlement stemming from the misinformation.

Factors Influencing the Cost of Liability Insurance

Business Size and Revenue: Larger organizations typically pay higher premiums due to increased risk and more exposure to large claims.

Industry: High-risk businesses, such as construction, may incur higher general liability expenses, whereas advice-based industries may have higher professional liability rates.

Location: Insurance rates vary by state and locality due to changes in laws and overall operational costs. For example, coverage in a big city may be more expensive than in a rural community.

Coverage Limits: Higher coverage limits provide more protection, but also raise rates. Businesses that require extensive coverage may pay extra, depending on their risk exposure.

Claims History: A history of previous claims, indicates a higher risk and usually raises rates.

EZ.Insure—A Quick and Affordable Coverage Solution

EZ.Insure is the simple solution for your insurance needs, offering competitive business insurance rates and policies tailored to small businesses. With policies starting for as low as $24.95/month, your business can be equipped with a well-rounded liability insurance package, to ensure you’re fully protected without having to break the bank.

How to Choose the Right Liability Coverage for Your Business

Steps to Consider

Evaluate Your Business Risks: Take the time to sit down and list out all of the potential risks that your business might face. Be sure to consider both physical incidents and professional errors.

Consider Industry Requirements: Next, think about the typical insurance requirements in your specific industry. Based on industry norms, you should get a pretty good idea of what coverage(s) are necessary.

Determine Your Budget: Evaluate how much your business can realistically afford to pay per month in premium costs. Then in turn, consider the level of coverage your business actually requires. While you never want to be under-insured, for a small business, a policy with a hefty coverage limit may not be necessary.

Consult with an EZ.Insure Expert

If you’re still unsure of which coverage type is right for your business, or if you need both, seek the help of an expert insurance agent at EZ.Insure. Working with a licensed agent ensures that no detail is overlooked in regards to your business, so that you’re matched with the most optimal policy type. They’ll also be there to help with every step of the enrollment process, and answer any questions about the selected policies details, so you walk away covered and confident!

Don’t Leave Your Business Exposed—Get Covered Today!

Liability coverage is critical for protecting your organization from unanticipated hazards and costly lawsuits. Whether you require general, professional, or both forms of liability insurance, the appropriate policy will keep your organization safe and secure.

Ready to get started? EZ.Insure is here to help! For a fast, free quote, simply fill out a form on our site, or give us a call at (855)-694-0047 today!

Looking for more information on securing your business? Check out our resource library, that’s home to tons of helpful articles all aimed to help small businesses succeed today and for years to come.

Restaurant Insurance 101: Coverages Every Owner Should Have

Today you’ll discover the essential coverages that restaurant insurance offers:

Protection against expensive accidents.

Peace of mind for you and your employees.

And a competitive edge in the restaurant industry.

Let’s get started.

Restaurant insurance is a specific type of business insurance designed to meet specific requirements associated with the food and beverage sector. While it is similar to standard business insurance, restaurant insurance plans focus on protecting against the unique challenges faced in the service industry. This includes issues such as foodborne illness claims, alcohol-related incidents, equipment failures and much more. To combat these particular obstacles, restaurant insurance policies bundle a number of different coverage to form a well-round protection plan.

Types of Coverage Included in Restaurant Insurance

The majority of restaurant insurance plans offer a variety of coverage options, including:

Each of these policies plays a crucial role in covering your restaurant from great financial loss.

But let’s dig a little deeper, to understand why each one is important in its own way.

General Liability Insurance

Especially in a busy setting like a restaurant, whether we like it or not, accidents happen. In simple terms, general liability helps handle these accidents by covering you against injuries to customers or any damage to their property while on your property. For example, let’s say a customer walks to the bathroom and slips on some grease that an employee accidentally dropped. In this instance, general liability insurance helps by paying for their medical expenses and any legal fees if they choose to file a lawsuit.

Property Insurance

Think about what physically makes up your restaurant. This includes your building, the kitchenware, the furniture and any decorations. These are the kind of assets that are protected by property insurance if a natural disaster, fire, robbery or vandalism occurs. If your restaurant suffers from one of these incidents, property insurance provides coverage in the form of replacements or repairs, so you won’t have to pay out of pocket.

Liquor Liability Insurance

Does your restaurant serve alcohol? If yes, then you may be held responsible if accidents occur involving intoxicated customers. Whether it’s a physical injury, damage to your property, or even an auto accident occurring after leaving your restaurant, liquor liability coverage protects against these types of claims. More specifically it pays for any damage taking place on the premises and the cost of court if applicable.

Workers’ Compensation

Since restaurants are fast-paced workplaces, it’s possible for employees to sustain injuries when they’re working. Medical costs and lost income are covered by workers’ compensation if an employee becomes ill or injured on the job. It is a crucial component of any restaurant insurance coverage because it is also mandated by law in every state except Texas.

Product Liability Insurance

As the owner of a restaurant, you are fully responsible for the food and beverages that you serve. If a customer has an allergic reaction or food poisoning as a result of anything they ate or drank, product liability comes in. It plays a large role in the protection of your financial well-being by paying for any medical or legal costs associated with the incident.

Business Interruption Insurance

Not only do unexpected events like fires and natural disasters have the potential to destroy your property, they can also shut down your business for extended periods of time. Luckily there’s a type of coverage to help when this sort of thing happens—Business Interruption Insurance. This insurance coverage helps by covering lost income if your restaurant is forced to close due to a covered event. Instead of risking having to close down permanently, with business interruption insurance, you’ll stay afloat and return to your business when the “down time” is over.

How Much Does Restaurant Insurance Cost?

A number of variables affect restaurant insurance rates. Below is a summary of the factors that could affect your monthly premium:

Location: Higher premiums may apply to a restaurant located in a high-risk location, such as one that is vulnerable to severe weather.

Size: In general, businesses that employ more people and have larger properties pay more in monthly premiums.

Types of Food Served: If your restaurant sells higher-risk food items like sushi or other raw items the risk of foodborne illness increases, which in turn may increase your costs.

Annual Revenue: Larger operations naturally present more risks, therefore restaurants with higher revenues may pay more in premiums.

Depending on the specific coverage needs of your business, monthly premiums vary quite a bit. With that being said, restaurant owners usually pay around $175 per month, or $2080 per year for a $1 million business owners’ policy (provides property, business interruption and liability insurance), according to Insureon.

How to Get the Best Restaurant Insurance Policy

Finding the most suitable restaurant insurance policy is more than simply getting the lowest price; it’s also about finding coverage that meets your company’s specific needs. Here are some suggestions to help you get the perfect policy:

Customize Coverage Based on Your Needs: Since every restaurant is unique, your policy won’t be the same as the restaurant across the street. More specifically, look to find a policy tailored to your businesses specific risks. For example, if you don’t serve alcohol, then don’t invest in liquor liability insurance. However if you do, this coverage is a must.

Check for Coverage Gaps: Be sure to carefully review each policy that you explore and compare, checking for gaps in coverage. Listing out your specific risks and corresponding coverage types ahead of time helps to ensure that nothing is missing.

Compare Quotes and Consult an Expert: Don’t settle on the first insurance package that you see. Instead compare a number of different options to find the one that fits your business best. EZ.Insure’s all-in-one platform makes it easy to consult with an insurance expert, view policies side by side, and get a quote all in a matter of minutes. This comprehensive approach ensures you can find a policy tailored to your restaurant’s unique needs.

Safeguard Your Restaurant Today

Having the proper insurance coverage is essential for safeguarding your business. Don’t wait until your company is in danger from an unforeseen circumstance. Now is the time to act!

Ready to take the next steps in securing your restaurant’s future? Get a free personalized quote today with EZ.Insure, so you can mitigate costly risks and keep serving customers with confidence. To get started, just fill out a quick form, or call us directly at (855)-694-0047.

Looking for more actionable ways to ensure your business is protected against the unexpected? Check our resource library, where we have dozens of informational articles, all aimed at helping business owners save money and reach their goals!

The Importance of Product Liability Insurance for Your Business

Product liability insurance is an essential form of protection for businesses who produce, distribute or sell goods and products. Regardless of how careful you are when producing or selling items, accidents happen. If an accident does happen to occur and it involves injury, damage or defects relating to your product, you could be held liable.

Fortunately, with the proper product liability insurance policy in place, you’ll instead be protected against the financial repercussions associated with the product-related claim. To help you get ahead of these types of potentially costly issues we’ve developed a simple guide explaining what product liability insurance is, risks it protects againsts, and why it’s so important for your business.

What is Product Liability Insurance?

Product liability insurance is a specific type of coverage intended to shield companies against lawsuits pertaining to goods they manufacture, sell, or distribute. These claims usually occur when a product injures a customer, damages their property, or has a flaw that results in harm. This insurance also covers the legal fees related to defending your company.

What Does Product Liability Insurance Cover?

Here are some of the main areas that product liability insurance generally covers:

Consumer Injuries: If a customer sustains injuries as a result of a flaw in your product’s design or function.
Property Damage: Product liability insurance pays for the necessary repairs if your product causes harm to someone’s property.
Defective Products: This insurance covers claims against your business if a product is defective due to a manufacturing error or incorrect labeling.
Legal Defense: Attorney fees, court costs, and any other expenses associated with defending your company in a lawsuit are all included.
Payouts for Settlements: If your company is held accountable for an accident, the insurance pays for the settlement or additional compensation owed to the impacted parties.

Why Your Business Needs Product Liability Insurance

In today’s day and age, lawsuits are quite common. Even the smallest problem with a product can result in an expensive lawsuit. While it’s important to always operate your business carefully with the proper safety measures in place, unexpected errors still happen. Without the right coverage, costs could overwhelm your company so much that you’re forced to take out loans or even worse, shut down for good.

The Risks of Selling Products

To help underscore the importance of product liability insurance, let’s examine some of the common risks involving products and goods.

Manufacturing Defects: Production mistakes resulting in the sale of hazardous or flawed goods to customers.
Flaws in Design: Even when dealing with high quality materials and top-of-the-line engineering, design flaws are possible and can put users at risk of injury.
Inadequate Labeling or Lack of Warning: Accidents or injuries stemming from mislabeling, or missing safety warnings result in your business being held liable.

A study from the Insurance Information Institute found that the average cost of a product liability claim can range anywhere from tens of thousands to millions of d

ollars, depending on the severity of the damage. Without product liability insurance these costs have the potential to devastate your business, even if they’re on the low end of the average cost scale.

How Product Liability Insurance Protects Your Business

This coverage serves as a financial safety net, covering the costs of legal defense, medical bills, and future settlement payouts. No matter if you’re a small or large business, the impact caused by product-related lawsuits can be extremely costly without the right insurance in place. Here are the main protections that product liability insurance offers:

Legal Costs and Fees: If a lawsuit is filed, the cost of legal representation can mount quickly. You won’t have to pay for your defense out of pocket thanks to product liability insurance, which covers these expenses. Also, product liability covers any additional lawsuit fees.
Medical Expenses: If a consumer sustains injuries because of a flaw in your product, insurance pays for their medical bills
Settlements and Payouts: A product liability policy will also cover the settlement and payout costs, if your company is found liable for a product defect.

Real-World Example: In 2017 there were multiple court cases involving exploding smartphone and electronic-cigarette batteries, where consumers were injured due to faulty equipment. In one case, the claims and defense costs totaled over $200,000. Luckily for the company at hand, their product liability insurance covered the expenses.

How to Get Product Liability Insurance

Getting product liability insurance for your business is a pretty straightforward process. First, you must consider the variables that affect your coverage. Insurance companies usually take the following factors into account when estimating premiums costs and the necessary level of coverage:

The Types of Products You Sell: Different types of products come with different levels of risk. For example, common household items like a table, come with far less risk than electronic or medical devices. If the products your company offers have high risk levels, it’s crucial to invest in product liability protection.
Sales Volume: The higher volume of products that you sell, means the higher chance that a product-related incident will occur. This increased risk may affect the cost of your insurance premium.
Business Size: The size of your business may also affect the monthly premium cost for product liability insurance. In general, premiums will be cheaper for smaller companies in comparison to large corporations.

Once you’ve taken some time to consider these factors, the next step is to work with a trusted insurance provider such as EZ.Insure. EZ.Insure’s process makes getting matched up with a quote and quality insurance plan quick and simple. With the help of our coverage comparison tools and expert insurance agents , you can get the coverage your business deserves!

In a Nutshell

For business selling, manufacturing or distributing goods, product liability insurance is a must. This essential coverage shields your company from costly financial risks stemming from product-related claims. Whether it’s legal fees, settlement costs, or medical bills, product liability has got your back.

Just because you haven’t had any product-related accidents yet doesn’t mean they can’t occur. Instead of wondering what might happen, be proactive by preparing for the unexpected. To take the next steps and get a free product liability insurance quote, just visit EZ.Insure and enter your zip code, or call us directly at 855-694-0047.

Do You Need Home-Based Business Insurance? 5 Questions to Ask

There are many benefits that come with running your business from home. This includes convenience, flexibility as well as comfort. With all this being said, many home-based business owners don’t consider the risks associated with running an organization from their house. This poses the question — “Do I actually need insurance for my home-based business?”

While you may scoff at the question at first, thinking it’s unnecessary, the truth is that just like any other business, having the proper coverage provides essential protection safeguarding everything you’ve worked for. But don’t just take our word for it. Instead, to help you make an educated decision about your options, we’ll delve into five critical questions to ask yourself. When it’s all said and done, you’ll have a solid understanding of why home-based business insurance is so essential.

Question #1: Do You Have Expensive Inventory or Equipment?

One of the first things to think about is whether or not your home-based business involves inventory or expensive equipment. Your homeowners’ insurance probably doesn’t cover business-related objects in the case of damage, theft, or loss, even if you work from home.

Think about things such as your laptop, tools, technology or any other equipment that’s vital to your business operations. Then consider any inventory. Do you sell goods? If the answer is yes, these items could also be in danger without the proper protection. In the unfortunate case of a fire or break-in, you may have to replace these valuables out-of-pocket.

Why This Question is Important

Your operation relies on your inventory and/or equipment and without it your business is probably not functional.
Without home-based business insurance, replacing these items may be very expensive or unaffordable.
Homeowner policies alone usually don’t cover inventory or equipment losses.

Question #2: Do Clients or Customers Ever Visit Your Home?

Do you ever hold meetings at your house office with customers or clients? If so, you might be putting yourself in danger for responsibility if an incident occurs. For instance, you can be liable for a client’s medical costs if they trip and fall on your property, leading to an expensive lawsuit.

General liability insurance covers property damage and physical injury claims made by third parties. Even if your place of business is your house, this type of coverage it’s still necessary for any company that deals with clients or consumers face-to-face.

Why This Question is Important

Hosting clients without the proper home-based insurance leaves you liable in the case of an injury
General liability coverage will take care of the costs of lawsuits or claims relating to an accident, so you won’t have to pay out of pocket.
Having general liability coverage puts clients at ease and bolsters your reputation as a responsible business owner.

Question #3: Could a Lawsuit Affect Your Financial Stability?

If you own a small business and are on a strict budget, a lawsuit could be extremely detrimental to your business. Even a small claim could have a huge negative impact. In addition to an injury-related incident, clients may also file lawsuits if they think you’ve committed a professional error or if they feel you failed to provide a promised good or service.

Unfortunately, the legal and court costs stemming from these types of situations can add up quickly and jeopardize your finances. That’s why it’s so crucial to consider investing in professional liability coverage on top of the general liability protection that we discussed above.

Why This Question is Important

Small businesses suffer far more than large corporations in the result of lawsuits since they generally don’t have nearly as much funds or resources.
Professional liability coverage takes care of legal fees, court fees, and other payouts associated with a business error.
Without coverage, a lawsuit could be so expensive that you’re forced to sell your assets.

Question #4: Do You Rely on Your Home-Based Business for Income?

If your home-based business is your main source of revenue, you should think about how an unplanned disruption could affect it. What would happen if your home was damaged by a fire, a natural disaster, or some other unanticipated incident that prevented you from using it for several weeks or even months?

Business interruption insurance acts as a safety net paying for lost income during these unexpected down times. This coverage guarantees that, even while your business is recuperating you can continue to fulfill your financial and client obligations, pay your bills, and provide for your family.

Why This Question is Important

Without business interruption insurance, an unexpected event may force your business to shut down entirely, therefore bringing your income to a halt.
This coverage oftentimes provides relief in the form of a new, temporary space to operate out of.

Question #5: Do You Use a Vehicle for Business Purposes?

While this question isn’t directly related to your home, many remotely-based entrepreneurs utilize vehicles in their day-to-day operations. Unfortunately, if you’re regularly using a car, truck or van for business purposes, your personal auto coverage probably won’t cover it.

Consider tasks such as delivery, client visits, or inventory transportation. If any of these are applicable to your company, and you aren’t properly covered, you’ll be financially liable for any accidents on the job. This is where commercial auto insurance comes in, protecting your business vehicle in the case of an accident during the work day.

Why This Question is Important

When using a vehicle for purposes related to your business, personal car insurance policies will not be enough.
If an accident occurs while you’re conducting business, you won’t have to pay out of pocket.
Without commercial auto insurance, you’ll be held liable for any vehicle damage, personal injuries or lawsuits stemming from the accident.

Final Thoughts on Home-Based Business Insurance

If you run a business from the comfort of your house, investing in home-based business insurance is crucial. Even if you still aren’t sure whether it’s necessary for your organization or not, just review the five questions listed above. If your answer to any of these questions is yes, home-based business insurance is likely a smart investment.

It’s important to get ahead of potential risks before they actually take place. If you decide not to, it could cost you an exorbitant amount of money, or even your entire business. So don’t wait for any surprises, instead, take time to review your coverage options, and find a plan that best fits your small businesses needs.

Visit EZ.Insure For Your Business Insurance Needs

We understand that shopping for business insurance isn’t fun and it can be confusing too. Luckily for you, there’s a platform that makes finding insurance quick and easy. We’re of course talking about EZ.Insure. At EZ we pride ourselves on the seamless, simple platform that we’ve built out. All you have to do is enter your ZIP code and in a few minutes you’ll be matched with a customized insurance quote for free! We also have side-by-side plan comparison tools so you can be sure to find the perfect coverage. To get started, fill out the form above or call us directly at 855-694-0047 to get started!

Commercial Insurance for Startups

You’re not starting any ordinary small business. You’re building a startup. Your goal is to grow and, in order to do this, you not only need a solid business plan, but also protection for everything that you’re building. Startups are inherently risky, so it is extremely important that you get the right commercial insurance coverage.

Insurance for the First Stages

If you’re in the first, or seed, stage of building your startup you are probably excited – and nervous about everything that’s to come. Maybe you’re not thinking about insurance, or think that it’s something that can wait until you’re further along in the process. Nothing could be further from the truth.

Startups are all about investment, and you need to think of commercial insurance as another investment to grow your business. Without it, you won’t be able to attract the best employees or convince investors that you are serious about your venture and are planning ahead for the long run. Even before you have customers, you should have the following policies:

General Liability – something that all businesses should have, this type of insurance protects you against lawsuits claiming bodily injury or property damage. But did you know it also provides coverage for personal and advertising injury like libel or slander?

Commercial Property – if you’ve got office space, then you need this type of policy to protect everything in it from risks such as fire or theft. There are commercial insurance packages available that will bundle liability and property coverage.
Workers Comp – if your startup has or plans on having employees, be aware that this type of coverage is required by individual states. It covers medical expenses and lost wages for an employee who is injured at work.

Tech E&O vs Cyber Liability

Once you’re past that first stage of getting your initial funding, setting up your space, and hiring your employees, it’s time to start thinking about what happens once you are up and running. Now you have customers, and a whole new set of risks.

The above type of insurance policies apply to all businesses, but you may need some specialized coverage for your startup. If you’re dealing with any kind of tech, as many startups do, there are two types of policies you should look into: tech errors & omissions (E&O) and cyber liability insurance. They may sound similar, but they cover different things.

Tech E&O – If you’re a business selling a physical product, then you need product liability in case a product fails. If you’re a firm offering financial or legal advice, then you need errors & omissions to protect yourself against claims of financial damage. If you’re a tech startup, then you need tech E&O. This type of coverage protects your company in the event that one of your tech-based products fails. If you are developing or licensing software, it is important to note that the insurance industry considers software a service and not a product. Because of this, you will need tech E&O, and not the same type of product liability coverage that might be sufficient for other businesses.
Cyber Liability – There is one very important thing that that tech E&O doesn’t cover: third-party data breaches. 43% of all cyber attacks happen to small businesses. With all the risks of cyber crime today, this type of insurance is essential if you store any kind of customer data.

While tech E&O covers the failure of software, cyber liability covers the loss of private third-party information. Depending on your startup, you may need both to be fully covered.

As You Grow

If your startup is taking off, congratulations! You’re growing, and are probably looking for more investment and taking on a board of directors. In this case, you’ll need another specialized type of coverage: Directors & Officers insurance.

This type of insurance covers both your business and your management, including their personal assets. It covers:

Theft of trade secrets

Misrepresentation, in the case that investors feel they were given
misleading information, leading to loss
Wrongful acts, covering anything that managers do in their professional capacity that stakeholders deem “wrongful,” and that results in a loss

Having D&O is important for attracting investors, who will feel more confident placing their trust (and money!) with you if you have comprehensive coverage. Your board members/managers will also feel confident making decisions without risk of personal liability.

Startups are unique among small businesses. They’re riskier, but they have more potential for growth. If you’re one of the few who have the vision and the drive, make sure that you protect everything you’re building. And remember, EZ.Insure is here to help you sort out your commercial insurance needs. We’re unique, too! We want your startup to succeed and will work with you to keep you covered. Our services are always free and nobody will ever hound you with endless calls. You have enough to worry about! To get started simply enter your zip code in the bar above, or you can speak to an agent by calling (855) 694-0047.

Does Your Business Need Intellectual Property Insurance?

If your business is run out of an office, a shop, or any other physical location, then you already have property insurance to protect yourself against the unexpected, right? Fire or theft are very real threats and you would never want to leave your business exposed. But what about the business assets you can’t see: your ideas? If you have patents, trademarks, copyrighted designs, or trade secrets that you want to protect, then you should look into getting intellectual property (IP) insurance. This type of policy can also protect you from an unexpected and very expensive lawsuit.

What Is Intellectual Property?

copyright trademark — *Copyright protects “original works of authorship,” usually things like writing, music, art, or even software.*

Simply put, intellectual property is any work of your own invention or creativity that you own the rights to. Unfortunately, you can’t simply jot something down and claim ownership of it. Your idea usually needs to fall under one of these four legally protected categories:

Patent – used to protect inventive ideas and processes
Copyright – protects “original works of authorship,” usually things like writing, music, art, or even software
Trademark – protects words, phrases, symbols, sounds, even smells and color schemes
Trade Secret – defined as “proprietary procedures, systems, devices, formulas, strategies or other information that is confidential and exclusive to the company using them.” This classification is less formal: the only way to protect trade secrets is to actually treat them like secrets.

What Are the Types of IP Insurance and Why Have Them?

There are two main types of IP insurance, and they each protect your business against different threats or risks:

Enforcement Insurance – some of the most valuable property you have is your own ideas, and you should protect them like a shop owner would protect their stock. In fact, it is estimated that your company’s intellectual property is 80% of its value. If another company steals some of your valuable ideas, this type of coverage will help you fight them with a lawsuit.
Defense Insurance – you should also remember that other companies want to protect their ideas, and they very well may have trademarked, copyrighted, or patented them. They will fight you if they feel you have used any of their intellectual property without permission. This type of policy will help you in case you are faced with a very expensive infringement lawsuit. According to the International Risk Management Institute (IRMI): “The cost of IP litigation can be astronomical, and continues to increase each year. In certain cases, the high stakes of IP litigation can pose a very real threat to the company itself.” When you consider that the cost of an intellectual property lawsuit can run from around $650,000 to more than $5 million, it seems like a good idea to have the peace of mind IP insurance can give you.

If you are interested in protecting your business against both types of risk, there is also a third type of policy, a defense and enforcement policy, which would provide both types of coverage. A creative and colorful illustration is drawn on a white brick wall, featuring a large lightbulb at the center symbolizing ideas. Surrounding the lightbulb are various icons representing business growth, innovation, and success, such as a rocket, stacks of coins, a bar graph, and keys. The top part of a person's head is visible at the bottom, symbolizing brainstorming or ideation.

Are There Limits to IP Insurance?

As with any type of insurance policy, you will need to find out how much coverage you will get. Some IP insurance carriers will only cover legal fees up to a certain amount. Some policies will only cover you in certain geographical areas.

In addition, if you have an enforcement policy, you will need to be very specific about the patents, copyrights, trademarks, or trade secrets you want to cover. These policies are not blanket insurance for the contents of your head, but will need to have every protected idea you want covered listed. If your intellectual property changes, your policy will also need to change.

If your business is all about ideas, inventiveness or creativity, or if you feel like you’ve got the secrets to success in your field, you may be selling yourself short if you don’t have IP insurance. Also, if you think that your general liability insurance will cover intellectual property infringement because it includes coverage for “personal and advertising injury,” you could find yourself with a very expensive mistake on your hands: these policies only cover infringement if it’s part of your advertising materials. In order to protect both your ideas and your business itself, intellectual property insurance may be the way to go.