Electronic Data Processing Insurance Michigan

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Electronic Data Processing Insurance Michigan Policy Information

MI Electronic Data Processing Insurance

Electronic Data Processing Insurance Michigan. Companies engaged in electronic data processing serve numerous branches of commerce and non-profit organizations by compiling valuable datasets.

Data processing operations perform accounting and record keeping functions for other businesses. The clients provide raw data in paper or electronic form from their operations.

The data processing firm enters the data for the client and provides the agreed-upon reports and reconciliations, which may include data cleansing and validation, sorting and classifying the data entered, and summarizing the results. The data is then stored for future use.

A data processing operation may be a captive of one major firm, may specialize in a group of related firms (such as a group of medical doctors), or may offer their services to the general public.

Data processors will program software at their own operation to provide the accounting and record keeping services to clients. They may also provide custom-developed software programs so that client firms can do their own data processing.

The information obtained over the course of electronic data processing may, for example, give businesses in the financial sector a significant competitive advantage.

Data processing companies, also sometimes referred to simply as "data processors", go through multi-step procedures that include collating, processing, interpreting, and storing data. This line of work heavily relies on high-value assets such as servers, computers, and electronic accounting machines.

While the role of electronic data processing across commercial sectors is only going to increase in the coming years, and businesses engaged in electronic data processing have the potential to be extremely successful, these companies also have to consider the many risks they face.

What types of electronic data processing insurance Michigan will best protect your financial health even if your EDP business is impacted by a major peril? Read on to learn more.

Electronic data processing insurance Michigan protects data services businesses from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.

Why Do Michigan Electronic Data Processing Businesses Need Insurance?

Companies dedicated to electronic data processing are vulnerable to the same risks as any other business. In addition, however, they face industry-specific threats that pertain to the value of the unique hardware they depend on and the risk that their data could be breached.

Just like any other commercial premises, the facilities and assets of MI businesses engaged in electronic data processing can fall victim to acts of nature - such as wildfires, severe storms, and earthquakes. The hazards of physical theft and vandalism are accompanied by the risk of cyber threats.

Electronic data processing companies also face another risk in the potential that their valuable hardware will become compromised, whether due to mechanical malfunctions or for any other reason.

In addition, employees may become injured while at work, or you may find yourself on the receiving end of a lawsuit that leads to exorbitant costs.

Despite your best efforts, the risk of catastrophic events can never completely be eliminated. Data processing companies can, however, carefully evaluate their insurance needs to guarantee that, even in the event of a major peril, they will not have to shoulder the massive costs alone.

In addition to the fact that certain types of electronic data processing insurance Michigan will be legally mandated, the fact that having adequate coverage can save your business from ruin represents the most important reason to invest in business insurance.

What Type Of Insurance Do MI Electronic Data Processing Businesses Need?

Each business is unique, and that fact should be reflected in your insurance coverage. Factors including how many employees you have, the jurisdiction in which you are based, the size of your operation, and the value of your assets all influence your insurance needs.

Consulting a commercial insurance broker who is deeply familiar with electronic data processing is the optimal way to receive advice tailored to your circumstances, as well as to get the best deal on your premiums.

With that in mind, EDP companies should certainly invest in the following key types of electronic data processing insurance Michigan:

  • Commercial Property: This form of coverage safeguards your financial interests by covering a majority of the costs you incur if your physical assets - your building and specified contents - are damaged or lost by acts of nature, theft, vandalism, or accidents. Commercial property insurance does not typically offer flood coverage, which needs to be purchased separately.
  • General Liability: Designed to cover your legal costs in the event that your company faces a lawsuit related to third party injury or property damage, this form of electronic data processing insurance Michigan is essential for any business. It is impossible to predict when you may face a third party property damage or personal injury claim, after all.
  • Electronic Data Processing Coverage: These policies may be referred to by a variety of names, including computer coverage and electronic data processing equipment insurance. They are sometimes sold as stand-alone insurance packages, but also often exist as add-ons to commercial property insurance policies. Regardless, EDP coverage serves the unified purposes of protecting your valuable equipment in case of malfunction, physical perils, or data breaches.
  • Workers Compensation: All companies with employees are further federally obliged to carry workers' comp insurance in most US states. Should an employee sustain a work-related injury or illness, their medical costs and any lost income will be covered.

To ensure that all your electronic data processing insurance Michigan needs are optimally met, given the fact that you may require further coverage, talk to an experienced commercial insurance profile to discuss your EDP company's risk profile.

MI Electronic Data Processing's Risks & Exposures

Premises liability exposures are minimal since most client contact is done electronically or by mail. If clients visit the premises, they must be confined to designated areas so that they cannot view or overhear conversations regarding other clients' confidential information.

To prevent slips, trips, or falls, all areas accessible to clients must be well maintained with floor covering in good condition. The number of exits must be sufficient and well marked, with backup lighting in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.

Off-premises exposures arise from sales visits and examination of records at the client's premises. There should be policies and training as to off-site conduct by employees. Personal injury exposures arise from allegations of breach of confidentiality as employees dealing with clients have access to their records.

Professional liability and errors or omissions exposures are extensive. Records improperly entered could have a major impact on the client's firm as the reports generated are relied on for filing taxes and for making major business decisions.

The exposure increases if the firm fails to conduct thorough background checks to verify employees' credentials and education, if clerical workers are allowed to do tasks that only professionals should handle, or if error checking procedures are ignored or are inadequate.

Very serious losses may result from failure to document decisions and actions or to secure client approval.

Workers compensation exposure is limited to that of an office, although some firms have significant off-site work as well. As work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations.

There may be a high stress factor during tax season as employees must work under deadlines. Back sprains and strains can result from lifting and other material handling if there is any moving of computers or related equipment.

If work is done at clients' premises, workers can be injured by slips and falls, assaults, or in automobile accidents.

Property exposure consists of an office operation. Ignition sources include electrical wiring, heating and air conditioning systems, wear, and overheating of equipment. Fire, smoke, and water can cause significant damage to equipment. Fire protection should consist of chemical applications instead of water.

Although computer equipment can be included as part of the business personal property coverage, better and more complete protection is available under an inland marine computer or EDP policy. The concentration of electronic equipment may be targeted by thieves. Appropriate security controls should be taken, including physical barriers to prevent access to the premises after hours and an alarm system that reports directly to a central station or the police department.

Business interruption is very high as the reconstruction of data, replacement of equipment, and duplication of records could cause an extensive shutdown.

Equipment breakdown exposures are high as the business is dependent on computers to process information for clients.

Inland marine exposures are accounts receivable if the center offers credit, computers, and valuable papers and records for clients' information. A computer or EDP policy is critical as it covers hardware, software, and media. There should be a frequent backup and off-site data storage.

The clients' records and valuable papers are typically originals that are difficult or expensive to recreate. A morale hazard may be indicated if the insured does not keep valuable papers and disks in fireproof file cabinets to protect them from smoke, water, and fire. Power failure and power surges are potentially severe hazards.

Duplicates should be kept off-site to allow for easy restoration. Off-site property exposures may be high as employees may have portable computers or home-site workstations.

Crime exposure is from employee dishonesty and computer fraud as data processors possess unique access to clients' personal financial information, including bank accounts and records. Potential for theft, directly or through identity theft, is great.

Background checks should be conducted on all employees. Hazards increase without monitoring procedures and securing all records to prevent unauthorized access. There must be a separation of duties between persons handling deposits and disbursements and reconciling bank statements.

Audits should be performed at least annually.

Business auto exposure is generally limited to hired and non-owned. If vehicles are provided to employees, there should be written procedures in place regarding personal use by employees and their family members. All drivers must have an appropriate license and an acceptable MVR. Vehicles must be well maintained and records kept in a central location.

Electronic Data Processing Insurance Michigan - The Bottom Line

To protect your EDP business, employees and clients, having the right electronic data processing insurance Michigan coverage is essential. To discover the types of policy options available to you, how much coverage you should invest in and the cost - speak to a reputable commercial insurance broker.

Michigan Economic Data And Business Insurance Requirements

Business owners who are interested in establishing operations Michigan must have a thorough understanding of the state's economy. They should also familiarize themselves with any regulations and limits that state may have in place for commercial insurance.

Made In Michigan

Any entrepreneur who is thinking about starting a business in the Great Lake State first needs to determine if it's a feasible location for business operations. As such, it's important to have a keen understanding of pertinent details regarding the economy of Michigan, in addition to the types of insurance coverage that are mandatory for corporations that operate within the state.

Economic Trends for Businesses In Michigan

After a long period of stagnant job growth in the early part of the 21st century, MI has been experiencing a steady increase in employment gains. Between 2009 and 2018, the state has enjoyed a period of uninterrupted job growth; the longest stretch of job growth since World War II. According to economists at the University of Michigan. While there has been a slight decline in the rate of job growth, job creation continues and forecasters say will continue for the next two years, into 2021.

In 2018, an estimated 55,200 jobs were created; in 2019, it's expected that 35,800 jobs will be created, and in 2020, economists believe that there will be a total of 39,300 jobs created in Michigan. While that rate of growth is 1.9 percent slower than the job growth rate between 2011 and 2016, it is still a steady increase overall. In total, approximate 683,200 jobs will be created in MI between 2099 and 2020; almost four out of the five jobs that were lost during the early part of the 21st century will be recovered.

While the unemployment rate has steadily improved, it is still above the national average. In March of 2019, the national unemployment rate was 3.8 percent, while in the state of Michigan, it was 4.0 percent. Mid-Michigan has experienced the largest growth rate in the state, and according to forecasters, it looks like that trend will continue, moving forward. Industries that are expected to see the most growth include:

  • Energy, due largely to research and development in clean energy
  • Food and agriculture
  • Water
  • Transportation and mobility
  • Healthcare industry
  • Information and technology

In the state of MI, business owners are not legally required to carry liability insurance; but most entrepreneurs opt to invest in a General Liability or Business Owner's Policy (BOP). A commercial auto insurance policy is also required for any businesses that use motor vehicles to conduct any aspect of their business operations. Workers' compensation insurance is also required for any businesses with non-owner employees. While the following forms of coverage are not required, depending on the type of business you operate, they are recommended:

  • Data breach insurance
  • Business income insurance
  • Commercial Umbrella insurance

Additional Resources For Information Technology & Internet Insurance

Learn about small business IT technology insurance policies that help protect IT businesses, consultants & subcontractors from the unique risks that small tech businesses face when they work.


Information Technology And Internet Insurance

Some the more popular IT businesses do IT contracting or freelancing work. These businesses have specific risks they face, and can have huge exposures to uncommon risks. Even if the business is very careful, a small oversight or mistake can lead to a large and expensive lawsuit.

For information technology companies, like some of the more popular ones listed below, data security is paramount:

Application Development (Mobile & Web), Business Intelligence / Data Mining Businesses, Computer Installation & Repair, Computer Programming, Computer Retail Store, Data Analysts, Architects & Scientists, Database Administrators, Frontend Developers, Hosting, IT Business Consulting, IT Project Management, IT Staffing, IT Training, Information Technology Consulting, Life Sciences & R&D, Network Architects, Network Security Consultants, System & Network Design, Technical Writing and Web Site Development.

The IT business segment has a critical need for professional liability and errors and omissions coverage. If coverage applies, the insurer has several rights and duties such as providing a legal defense against claims and suits brought by parties claiming damages. The insurer is permitted to investigate all claims to determine whether they are covered by the policy and they may choose to litigate, deny or settle claims.

Most policies providing coverage for electronic data liability, computer professional liability, and computer errors and omissions are claims-made contracts.

Minimum recommended small business insurance coverage: Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Computer Fraud, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Errors and Omissions Liability, Professional Liability, Umbrella Liability, Hired and Nonowned Auto Liability & Workers Compensation.

Other commercial insurance policies to consider: Building, Earthquake, Flood, Real Property Legal Liability, Forgery, Cyber Liability, Employment-related Practices Liability, Directors and Officers Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.


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Also find Michigan insurance agents & brokers and learn about Michigan small business insurance requirements for general liability, business property, commercial auto & workers compensation including MI business insurance costs. Call us (313) 344-7177.

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