Intellectual property insurance

Start here - what IP insurance does for your business

Intellectual property insurance helps your business manage the financial impact of disputes involving patents, trademarks, copyrights, designs and allegations of infringement. It exists to fund legal defence, pursue your rights, and cover settlements or damages where applicable. If you create, license, sell, or rely on intangible assets, this cover can be the difference between a manageable setback and a serious threat to cash flow.

In 2025, the UK market is notably buyer friendly. Professional indemnity rates have eased across many sectors, and competition has widened cover scope with fewer exclusions. At the same time, UK trademark filings continue to climb and high profile disputes show how quickly legal costs can escalate. Tech and software firms, particularly those adopting AI, are seeing more IP-related submissions as they balance innovation with new infringement risks. Regulatory changes have also encouraged new insurance capacity, improving access to specialist IP solutions.

The aim of this guide is to remove confusion so you can decide, in plain English, whether IP insurance is right for you. We explain what is and is not covered, how claims usually work, and what affects price. We will also point out common limitations and when this cover might be unnecessary. The focus is on clarity, accuracy and consumer safety.

Insurance can offer real financial protection, but only when you understand what is covered - and where the gaps are.

Use this as a practical reference before you compare policies or speak with a broker. It will help you ask the right questions, set realistic expectations, and protect your business prudently.

What is covered and how it typically responds

Most IP policies fall into two broad areas: defence cover when someone accuses you of infringement, and enforcement cover when you need to protect your own rights. Defence cover usually pays for legal representation, court fees, expert reports, and negotiated settlements or damages up to the policy limit. Enforcement cover can fund cease and desist actions, injunctions, and litigation to stop others using your IP without permission. Many policies also include cover for contractual indemnities, media liability elements, or unintentional breach of third party rights in marketing materials.

Insurers increasingly address blended risks where IP and cyber issues overlap. For example, a data breach exposing proprietary code could lead to allegations of misuse or trade secret loss. Some policies integrate with standalone cyber insurance or offer endorsements to close common gaps. The UK market in 2025 is focusing on broader wording rather than blanket price rises, which benefits buyers seeking clarity on AI and software related exposures.

There are limitations. Known infringements, deliberate acts, and fines or penalties are commonly excluded. Cover for punitive damages, jurisdictional disputes, or worldwide enforcement may require specific endorsements. Insurers often require counsel consent before costs are incurred and may set sublimits for certain activities, such as product launches in high risk territories. A simple example: if a startup is accused of infringing a competitor’s patent, defence cover can fund the response and potential settlement. If a retailer faces copycat branding, enforcement cover may pay to stop the infringement. However, if the issue was known before the policy start date, the claim may be declined.

Who benefits most - and who may not need it

This cover is most valuable for UK businesses that create or commercialise intangible assets. Software developers, AI startups, design and engineering firms, creative agencies, manufacturers with patented components, and e-commerce brands with distinctive trademarks are typical buyers. SMEs with limited cash reserves often value the policy’s ability to fund extended legal defence, especially as most small businesses do not win every dispute they initiate and legal costs can escalate quickly.

It may be less essential for micro businesses that do not develop original content or technology, have low brand exposure, and operate purely under third party licences where IP risk is contractually allocated elsewhere. Even so, consider whether contracts require indemnities or warranties that still place risk on your business. If your exposure is minimal, you might prioritise other protections first and revisit IP insurance as your assets or market footprint grow.

Choosing your level of protection

1. Essential - defence only

   • Focus: Responds when your business is accused of infringement.
   • Typical inclusions: Legal defence costs, court fees, settlements or damages up to the limit, early neutral evaluation or mediation support.
   • Who it suits: Early-stage businesses prioritising affordability and core protection.

2. Standard - defence plus enforcement

   • Focus: Covers both defending against claims and enforcing your own rights.
   • Typical inclusions: All Essential features, plus funding to pursue infringers, injunctive relief, and selective cover for contractual indemnities.
   • Who it suits: Growing firms with trademarks, code bases, or designs central to revenue.

3. Comprehensive - broader risks and higher limits

   • Focus: Wider territories, higher limits, and integrated options for media liability and cyber-triggered IP events.
   • Typical inclusions: All Standard features, extended jurisdictions, higher sublimits, crisis communications, and cover enhancements aligned to AI and software development.
   • Who it suits: Scale-ups, exporters, and companies operating across multiple markets.

4. Optional add-ons

   • Contractual indemnity uplift - higher limits where contracts require you to indemnify clients.
   • Trade secret misappropriation - enhanced wording for confidentiality breaches and employee mobility risks.
   • Patent-specific extensions - for industries with frequent patent disputes and complex prior art analysis.
   • Worldwide launch cover - short-term project extensions for product or brand launches in new territories.
   • Cyber integration - coordinated wording and breach response to reduce overlap and gaps.

Pick a level that matches your actual exposures, not the highest limit available.

What it costs and the drivers of price

Pricing varies widely. In 2025, competitive market conditions and expanded capacity have put downward pressure on average rates in several sectors, while higher risk categories still command stronger pricing. Use these trends as guidance only and obtain quotes based on your specific exposure.

Are you eligible - and what insurers ask for

UK businesses of most sizes can apply, including startups and SMEs. Insurers typically request details of your products or services, territories, revenue, and any prior disputes. Expect to provide information on your IP portfolio, such as registrations, licences, developer agreements, open source usage policies, and clearance processes for branding and marketing. For technology firms, development workflows, testing, and third party code usage are often reviewed.

Common reasons for decline include ongoing or known infringements, unresolved cease and desist letters, inconsistent ownership or assignment of IP, and contracts that create unmanageable indemnity obligations. If you have a history of disputes or operate in highly litigious territories without formal controls, you may be offered narrower terms or higher excesses. Being transparent and providing clear documentation usually produces better outcomes.

From quote to claim - the simple path

1. Gather product, revenue, and IP ownership details for the past 12 months.
2. Request quotes with desired limits and territories from multiple providers.
3. Share contracts with indemnities so underwriters can assess requirements fairly.
4. Review policy wording carefully, focusing on exclusions and sublimits.
5. Bind cover and store documents, contacts, and notification procedures centrally.
6. If an issue arises, notify the insurer immediately and follow counsel guidance.
7. Provide evidence, timelines, and correspondence to support the claim assessment.
8. Agree strategy, costs, and settlement authority before proceeding with litigation.

The balanced view - benefits and trade offs

Key checks before you commit

Before buying, read the schedule, wording, and endorsements line by line. Confirm the scope of defence and enforcement cover, any waiting periods, and exactly which IP rights are included. Note the policy excess per claim and any higher excess for certain territories or patent actions. Check sublimits for injunctions, crisis communications, and contractual indemnities. Pay attention to conditions precedent, such as the requirement to obtain insurer consent for counsel or settlements. At renewal, review changes in exclusions or pricing, especially if your product roadmap, territories, or contracts have evolved. Keep evidence of ownership, registrations, and developer assignments ready, as poor documentation can delay or jeopardise claims.

Alternatives if this is not the right fit

1. Professional indemnity insurance
   • Useful where IP risk is incidental to broader professional services liability.
2. Cyber insurance
   • Addresses data breaches, ransomware, and trade secret loss with incident response.
3. Media liability insurance
   • Focused on copyright, defamation, and advertising content risks.
4. Contractual risk transfer
   • Negotiate client contracts to limit or share IP indemnities and liabilities.
5. Legal expenses insurance
   • General cover for certain legal disputes if IP risk is minimal.

Frequently asked questions

Q: Is IP insurance the same as professional indemnity? A: No. Professional indemnity focuses on negligence in providing services. IP insurance addresses infringement allegations and enforcement of your rights. Some PI policies include limited IP extensions, but scope and limits differ.

Q: Do I need registrations to buy cover? A: Not always. Many policies cover unregistered rights like copyright and certain designs. However, registrations can help evidence ownership and may improve terms or claims outcomes. Check wording carefully.

Q: Will it cover disputes in the United States? A: Often only if specified. US litigation can be costly and may require separate limits, higher excesses, or specific endorsements. Confirm included territories before relying on cover.

Q: How do AI and open source affect cover? A: Insurers increasingly assess AI training data, licensing, and open source compliance. Clear records, approvals, and governance can support eligibility and pricing, and reduce claims friction.

Q: Are cyber incidents included? A: Some policies integrate cyber-triggered IP events, such as trade secret theft. Others exclude cyber and expect a separate cyber policy. Ask how the two policies interact to avoid gaps.

Q: What happens if I receive a cease and desist letter? A: Notify your insurer as soon as possible, share the correspondence, and follow panel counsel guidance. Acting early helps control costs and keeps you within policy conditions.

Q: Can startups get cover cost-effectively? A: Yes, especially in 2025 with strong market competition. Starting with defence only and sensible limits can provide affordable protection, with options to expand as you grow.

What to do next

Take stock of your IP assets, contracts, and territories, then decide what you need the policy to do in a realistic dispute. Compare defence-only and combined options, check exclusions, and request quotes from multiple providers. If you are unsure, a regulated broker can help you assess risks without pressure and explain trade offs clearly.

Important notice

This guide is general information, not personal financial advice. Policy terms, exclusions, limits, and claims handling vary by insurer. Always read your policy documents carefully and seek professional guidance if you are uncertain about suitability for your circumstances.