Expanded Info on the 126 Questions to Ask Your Insurance Agent – Question 61

Question For Your Agent #61 – Am I covered for the loss of trade secrets if an employee goes to a competitor?

This question is designed to promote a conversation about risk management. Loss of trade secrets is not covered by most insurance policies. Even your employee dishonesty coverage excludes such, as the loss is not to tangible property.

While there are specialty (read, “expensive”) programs out there with limited coverage for loss of trade secrets, your best bet is internal security and contractual protections. Speak with your employment law attorney about what can be done to prevent others from profiting from the work and the innovation you paid for.

Frankly, this is a tough area. Most states restrict impinging on a former employee’s ability to work by use of noncompete agreements. Confidentiality and trade secret agreements may be an option. Insurance really isn’t going to help you.

Talk with your attorney.