Are you insuring your intangible assets for your business? Almost every organization has risks associated with intangible assets, which make up the lion’s share of the average value of a business, according to Forbes. The proportion can be even higher if you own a small business in startup mode. Insuring intangible assets can help small business owners protect their intellectual property. Let’s define what intangible property means, give examples of some intangible assets your company may already have, as well as outline how cyber liability insurance can protect your business.

What is an Intangible Asset?

An intangible asset is property that is not physical in nature. Intangible property is anything with no obvious and assigned value, and can’t be physically held. Intellectual property is one of the most common forms of intangible property. Companies possess intangible property along with their physical assets. Intangible assets are driving the explosive growth of the digital economy. Some categories of intangible assets are:

  • Computer software
  • Trademarks, trade names or brand names
  • Patents, inventions, formulae, processes, designs, patterns, trade secrets or know-how
  • Copyrights
  • Life insurance contracts
  • Securities investments
  • Partnership interests
  • Data, algorithms
  • Research & development (R&D)
  • Goodwill – when one business acquires another, above and beyond the price tag for the “brick and mortar” of the business
  • Licenses to operate
  • Customer lists
  • Land usage rights

Some forms of these intangible items are known as capital assets and appear on a company’s financial statements, while others are not included. For example, a company may list a trademark or patent as an asset on its balance sheet.

Why is it important to protect these intangible assets?

Tech companies, like Apple and Google, have great amounts of intangible property to maintain. However, you don’t need to be a tech giant to benefit from protecting your company. If your company operates in a creative industry and decides to start selling clothing patterns that you designed and drafted, these patterns would be considered intangible property. You will need to protect them for the sake of your brand name and for legal and accounting purposes. Therefore, it is critical that your business takes great care to properly value your intellectual property, as it is considered an asset that must be accounted for on the company books.

Seven of the world’s 10 largest companies were built on a data-first business model. The Ontario Chamber of Commerce estimates that 70% of the value of companies listed on the TSX consists of intangible assets.  

Protect your business and your brand

Intangible assets are defined as property that is not physical in nature. However, damage to intangible assets, like brand recognition and reputation, can harm a business as much as the destruction of a physical asset. “On average, more than 25% of a company’s market value is directly attributable to its reputation in the marketplace,” says Lloyd’s Canada President, Marc Lipman. According to Lipman, intellectual property, human capital and brand/reputation are the three major categories of intangible assets. “Reputational risk is something that is going to have to become a mainstream insurance product,” he said.

In a separate interview with Canadian Underwriter, Maddi Brown, Intellectual Property Practice Leader with London-based CFC Underwriting, says brokers are beginning to advise their clients to look at insurance that covers intellectual property. Intellectual property coverage helps businesses defend themselves against patent, copyright and trademark infringement, as well as things like contractual indemnities, loss of intellectual property rights and loss of profit. “Clients want this cover,” Brown said. “They just don’t know it exists.”

According to a survey by, one quarter of Canadian companies have been victims of a cyber attack in 2021. It was also reported that $106 million was lost in Canada due to scams and frauds in 2020. 

Ensure customer protection from cyber attacks

With the proliferation of the internet and the digital age, risks to your business increase. This is why cyber liability insurance coverage is essential to protecting your business. As a business owner, you may ask why you should care about cyber insurance. Here are two main reasons why:

  1. If you are running a business, technology can be your best friend or enemy. Many small businesses rely heavily on technology to help them manage their business from emails, social media, and even managing their own website. However, cybercrime is on the rise, and poses a threat for businesses of all sizes. The difference between small business owners and Fortune 500 companies is that large conglomerates can afford the large payouts. In contrast, small businesses may go out of business because the cost of clean up after a breach can be considerable, not to mention revenue loss during downtime.
  2. According to Chubb Insurance, cyber criminals increasingly focus on small businesses. Why? Because most small businesses mistakenly think that cybersecurity services are beyond their means. Since small businesses are a big target for cyber criminals, a priority for you will be getting adequate cyber insurance coverage to protect your business.

Protect your business with cyber liability insurance

In order to protect your business’ tangible and intangible assets, the addition of cyber liability insurance to your portfolio is critical. This type of coverage is new and is continually evolving. So, it’s important to speak with your isure broker, who will provide you with all the details of the policy you want. The risks to your intangible assets increases as society becomes more reliant on digital means to do business. A breach can cost your company millions of dollars, which is why cyber insurance is so important. If you have any questions or have interest in this type of coverage, contact us today!  

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