AI Copyright Indemnity Reserve Calculator
Quantify how much cash to earmark for copyright infringement disputes linked to generative AI outputs. Provide AI-driven revenue, a severe claim percentage, and the indemnity limit you negotiated. Optionally add any retention, likelihood of a claim, and your operating margin to surface uncovered exposure, expected loss, and the margin runway the reserve would consume.
This model does not constitute legal advice. Work with counsel and risk advisors to interpret indemnity clauses, insurance coverage, and exposure assumptions specific to your contracts.
Examples
- $12,500,000 AI revenue, 35% claim, $3,000,000 indemnity, $500,000 retention, 6% probability, 22% margin ⇒ Modeled infringement claim exposure: $4,375,000.00 USD • Vendor indemnity expected to cover: $3,000,000.00 USD • Self-funded retention and overage: $1,375,000.00 USD • Expected loss at 6.00%: $82,500.00 USD • Reserve equals 6.00 months of margin • Retention share of claim: 11.43%
- $4,500,000 AI revenue, 20% claim, $1,500,000 indemnity, no retention, 3% probability, 18% margin ⇒ Modeled infringement claim exposure: $900,000.00 USD • Vendor indemnity expected to cover: $900,000.00 USD • Self-funded retention and overage: $0.00 USD • Expected loss at 3.00%: $0.00 USD • Reserve equals 0.00 months of margin • Retention share of claim: 0.00%
FAQ
Does this cover statutory damages caps?
No. Enter the damages percentage that aligns with your counsel's assessment, whether statutory caps or actual loss estimates, so the exposure reflects your policy language.
How should I treat multiple vendors?
Run separate scenarios for each model provider's indemnity limit and retention, then sum the uncovered portions if your workflow combines outputs across vendors.
Can I compare the reserve with insurance limits?
Yes. After calculating the self-funded amount, stack it against any media or tech E&O limits you maintain to confirm whether the combined coverage meets your board's risk appetite.
What if my margin is negative?
Enter a zero margin to see the reserve requirement without a months-of-margin view, then work with finance to translate the cash need into other KPIs such as runway or burn.
Additional Information
- Worst-case claim percentage converts revenue into a damages estimate; stress test multiple scenarios for different legal theories.
- Retention captures the amount you must self-fund before vendor indemnity or insurance responds.
- Expected loss multiplies the uncovered exposure by the claim probability so risk teams can compare against cyber or media liability insurance premiums.
- Months of margin translate the reserve into operating runway, helping finance balance risk protection with growth investment.