As it turn out, you can get insurance on just about anything, including “alien abduction insurance.” So what about insurance coverage for a company’s trade secret?
It also exists.
SO HOW DOES TRADE SECRET INSURANCE WORK?
Trade secret (“TS”) coverage works like more traditional, tangible assets coverage. Some carriers will offer an agreed value (“AV”), first party coverage for up to $50M limits, for instance. Thus, this protects against the perils of theft, disclosure, or misappropriation. TS coverage will also include both pre and post loss trade secret risk management services as part of the insurance cost.
WHY IS THIS COVERAGE NEEDED?
TS coverage is a great idea for two reasons: one, it assists in the valuation and management of one’s company, by aspiring to set a value on its intellectual property, also showing a desire to protect that value.
Secondly, the AV coverage eliminates the guesswork when it comes to claim evaluation. Different experts may disagree as to the true value of confidential information. But a stipulated value removes all the guess-work. Plus, this reduces the number of issues regarding an insurance claim.
DON’T INTELLECTUAL PROPERTY (“IP”) POLICIES PROVIDE SUFFICIENT COVERAGE TS?
IP policies typically only cover defense and settlement costs arising out of infringement of patents and other forms of IP. Plus, such a policy is typically written on a third-party basis. Thus, it covers your defense of claim by another party, without necessarily covering your own first party losses. Companies like Marsh can provide more information about these produces and services.
HOW ARE TRADE SECRETS VALUED?
The insurance carrier will provide a detailed review of any given “trade secret” to assess its true value in terms of: (1) the money spent to create it and (2) the value of the TS in the industry.
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WHAT ITEMS ARE COVERED?
TS protection can cover:
- Agreed fair market value payment for stolen, copied, or misappropriated TS;
- Legal costs to proceed with claims against third parties to protect the information via restraining or award for compensatory damages.
Let’s Get Started!
Contact a Pittsburgh lawyer at our firm for any misappropriation of trade secret claim or defense in Pennsylvania.
412.342.0992
