Wednesday, August 18, 2010

Lots of copyright insurance questions ...


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Dear Rich: If I decided I wanted copyright infringement protection insurance what approximately is the market cost for such insurance if it covers attorney fees within the policy in addition to the maximum policy value insured, damage fees, a lawyer's opinion letter, a policy that covers claims outside the U.S .as well as inside the U.S., in other words worldwide effective. It also should be an 'occurrence' policy. Does every claim within an insurance policy require a separate deductible? What is the issue behind the insurance appointing an attorney as differentiated from the insured appointing an attorney? Who has the final say on a settlement, the policy holder or the insurance company? We're not sure when this trend started but lately we've been receiving a lot of multi-question questions. It's like getting a Russian nesting doll in our email -- within each query is another query and then another. We're starting to feel  like Mickey Mouse in the Sorcerer's Apprentice where the brooms almost drown Mickey under buckets of water. (We'd continue coming up with bad metaphors but we've got a lunch appointment  ...)
Right, you had a question(s). For starters, you should be addressing these questions to an insurance broker, not us. We can't tell you the cost of insurance because it varies depending on many factors including the amount of the deductible, the size of your enterprise, the purpose of your enterprise, whether seeking to protect individual or multiple publications, the extent of the coverage (claims wise and territory wise), the extent of damages, whether any claims have been threatened, the exclusions, etc. We can tell you that it will be many thousands per year and very likely more than $10,000 a year if you are seeking to ensure a mid-sized business (20-100 employees) from worldwide copyright claims. 
Attorney fees and more.  Ideally, you would want a policy that provides coverage for attorneys fees and payments of any damages or awards against your company. Sometimes, the policy limits the total spent on lawyers to the liability limits of the policy -- that is, once you hit your limits, there's no more money paid to the attorneys. Sometimes, it's a matter of getting insurance company approval for fees. If the policy requires that the insurance company defend a copyright lawsuit against your company, the insurance company will provide and pay for the lawyers. Whether the insured can choose counsel or whether the insured must accept the insurance company's decision is a matter of policy language (and to some extent state laws). In cases where you can't choose counsel, the insurance company may provide a list of attorneys and it may be possible to review this list prior to signing off on a policy.
Opinion letters. We're not positive what you mean by opinion letters. Often an insurance company requires an opinion letter from a lawyer about your products or services before issuing a policy. Typically, you, not the insurance company would pay for that. 
Deductibles.  We believe the final answer on deductibles is a matter of negotiation and policy language. Some deductibles apply per event, some are "flat dollar" (or fixed fees) and some are established as percentages of the total policy limit. 
Who has the final say? Like so much else with insurance, the final say on settlement is usually a matter of policy language and you should expect that most insurers will want to control this. In some cases, the insurer may claim the right to prevent your settlement of a claim without its consent. In other cases, the policy may require your consent to a settlement. Often multiple claims are made in a dispute and the insurer may argue that it is only liable for the portion that is covered by the policy -- for example, the insurer will cover copyright claims but not defamation. As you may be aware, insurance companies routinely deny coverage for various reasons and the policy holder often needs to chase the insurer to acquire the needed protection. The courts will have the final say based on the interpretation of the policy language and state law.  If you'd like to learn more about these issues, we recommend this book. It lists all of the issues to be considered when obtaining IP insurance and also provides a list of the major players.