My phone buzzed at 6:00 AM with a frantic text from my biggest client: a screenshot of a legal demand letter regarding the “free” font I used for their packaging refresh. The foundry was demanding $20,000 for retroactive commercial licensing and damages, or they would file a federal copyright lawsuit. I pulled up the font download site, only to realize the “Personal Use Only” disclaimer was buried in a txt file I hadn’t opened three years ago.
Key Takeaways
- You are liable: If your contract guarantees “original work” or “cleared rights,” the financial burden falls on you, not the client.
- General Liability won’t pay: GL policies cover bodily injury, not intellectual property (IP) disputes.
- The “IP Exclusion” is tricky: Some cheap E&O policies exclude copyright claims entirely—you need a policy that explicitly covers “Intellectual Property Infringement.”
- Settlement is cheaper than defense: In 2026, the average retainer for an IP defense attorney is $15,000; insurance often prefers to just pay the troll to go away.
The “Why”: The Intellectual Property Exclusion
Here is the trap most designers fall into: they buy a “Business Owners Policy” (BOP) thinking it covers everything. It doesn’t.
If you look at the Exclusions section of a standard General Liability policy, you will see a clause for “Intellectual Property.” It explicitly states the carrier will not pay for claims related to copyright, patent, or trademark disputes.
To survive a font lawsuit, you need Professional Liability (E&O), but even then, you must check the fine print. Some budget E&O carriers in 2026 have added “Copyright Exclusions” for software and fonts, classifying them differently than “creative design errors.” You need a policy that defines “Professional Services” to include the selection and licensing of third-party assets.
The Investigation: I Quoted 3 Major Carriers
I posed as a freelancer with a $20,000 claim looming to see how the big players handled font licensing disputes.
1. Hiscox (The IP Specialist)
- The Pros: Hiscox has historically been the strongest for creatives. Their standard policy specifically mentions “Copyright Infringement” as a covered peril. When I spoke to an underwriter, they confirmed that “inadvertent unauthorized use of a font” is a classic claim they cover.
- The Cons: They are aggressive about “Knowledge Dates.” If you knew the font might be an issue before you bought the policy, they will deny the claim immediately.
2. The Hartford (The expensive Safety Net)
- The Pros: They offer a “Mitigation of Damages” clause. This means they might pay the $20,000 settlement without requiring a full lawsuit to be filed, just to stop the bleeding. This saves your client relationships.
- The Cons: Their deductibles are high. You might be paying the first $2,500 or $5,000 out of pocket before they kick in a cent.
3. NEXT Insurance (The Budget Option)
- The Pros: Very cheap and fast. Good for getting a certificate to show a client.
- The Cons: I found their IP coverage definition to be narrower. They focus heavily on “negligence.” If the font foundry proves you ignored the license file (gross negligence), a budget carrier might fight the claim, leaving you exposed.
[IMAGE: Screenshot of a policy declaration page highlighting the “Intellectual Property” coverage limit]
Comparison Table: IP Defense Coverage
| Carrier | Monthly Prem. | IP Defense Limit | Deductible | Best For… |
| Hiscox | $60 | Full Policy Limit | $500 | High-risk creative work |
| The Hartford | $110 | Full Policy Limit | $2,500 | Established agencies |
| NEXT | $45 | Sub-limited (Check policy) | $1,000 | Small, low-risk gigs |
Step-by-Step Action Plan
- Do Not Admit Guilt: Do not reply to the client saying, “I messed up.” Reply saying, “I am investigating the license validity.”
- Find the Receipt: Dig through your downloads. If you can prove you thought it was free or have a Creative Commons receipt, your position improves.
- Notify Your Carrier: Log the claim immediately. If you try to negotiate with the font foundry yourself and fail, the insurance company can deny you later for “prejudicing the rights of defense.”
- Check the “Retroactive Date”: Ensure your policy was active (or retroactive to) the date you created the design, not just today’s date.
FAQ
Does my policy cover the license fee or just the lawsuit?
Insurance pays for damages and defense. They usually won’t pay the $50 license fee you should have paid originally, but they will pay the $20,000 “penalty” demanded by the trolls.
Can I just ignore the letter?
In 2026? No. AI-driven legal bots track these images across the web. If you ignore it, they will file a default judgment, and your wages could be garnished.
Am I liable if the client provided the font?
Generally, no. If the client sent you the font file, the liability usually shifts to them. However, you still need insurance to pay for the lawyer to prove that.