The benefits of patent insurance

Intellectual property (IP) infringement lawsuit is a major financial threat to the companies. Whether the company is a plaintiff or defendant, the company has to bear a substantial cost to litigate the case. The average cost of litigating a case in theUSA is about $2.08 million. The patent insurance can help to reduce the financial burden of a company in patent lawsuit. Therefore, a business should balance the cost and benefit associated with the patent protection. A patent is exclusive rights granted to the inventor by the government of his country for commercial or non-commercial use of his/her invention for a limited period. When a person gets the exclusively rights of the invention, he has the legal authority to exclude others from copying, modifying, using or selling the invention to the others. He also can prevent others to make profit from his invention.
In the modern age, each type of risk is insurable. Therefore, the financial risks associated with the intellectual properties can be insured. This type of insurance is called patent insurance. Patent insurance company generally offers two types of policies. One is IP defense policy which protects the IP assets from the future infringement claims. The other is IP abatement policy that helps to enforce IP assets strongly.
The IP defense policy provides the following benefits to the company.

The defendant has enough funds to fight a lengthy legal battle against the plaintiff. It increases the likelihood of a favorable outcome.The Insurer does not have to depend on the operating funds or capital of the company.Strong financial capability provides a stronger legal position by which the company resists the pressure of settling or licensing others.
On the other hand, IP abatement policy provides the fund and services to enable insurers to afford a stronger negotiation position and it also protects and the IP rights. The main features are:-
 It reduces the risk of abandoning the rights in the middle of litigation process.
The outcome of the litigation depends on the merits of the case, not on the financial capabilities.
The insurer will not have to enter into an undesirable agreement with the infringer due to financial inability.
However, the cost of the IP insurance is much higher than the conventional policies. Insurance coverage starts from $250000. Premiums are calculated on the basis of relative risks. In general, the amount of premium is 1-5% of the coverage amount. Besides it, various types of riders can be included into patent insurance. Another advantage of the policy is that the insured value is shown as asset in the balance sheet.
Therefore, IP insurance is a unique method to protect the invention from the infringement. You will get more details from here.