Electronic Data Processing Equipment Insurance Policy Information
Electronic Data Processing Equipment Insurance. It goes without saying that one of the most fundamental developments in industry and science in recent years has been the explosive growth of electronic data processing. Virtually every business and industry utilizes some phase of this revolutionary development.
The Nationwide Inland Marine Definition includes electronic data processing equipment insurance (EDP) as inland marine.
Most states have approved this approach but a few have not. In any case, most of the coverage forms developed for this coverage are inland marine based. The American Association of Insurance Services (AAIS) has developed a coverage form that is a good model to use to review common coverage for this type of property.
Every EDP insurance coverage form insures three types of property: hardware, software, and website servers:
Hardware is the more tangible and easily valued type of property because it is the equipment.
Software is much more difficult to evaluate and replace because it runs the equipment and also stores the information on the hardware.
Website servers include servers both on the premises and off the premises that operate website software.
Hardware coverage may be compared to business personal property coverage. Software coverage is more similar to valuable papers and records coverage.
Electronic data processing equipment insurance protects your computer hardware that uses data including desktops, laptops, tablets, phones, servers, networks and more from theft, damage or loss - with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked EDP equipment insurance questions:
- What Is Electronic Data Processing Equipment Insurance?
- How Much Does Electronic Data Processing Equipment Insurance Cost?
- What Property Does Electronic Data Processing Equipment Insurance Cover?
- What Property Does Electronic Data Processing Equipment Insurance Exclude?
- What Hazards Does Electronic Data Processing Equipment Insurance Cover?
- What Hazards Does Electronic Data Processing Equipment Insurance Exclude?
- What Are Electronic Data Processing Equipment Insurance Endorsement Options?
- What Does Electronic Data Processing Equipment Insurance Cover & Pay For?
What Is Electronic Data Processing Equipment Insurance?
Electronic data processing equipment insurance is a type of insurance coverage that protects electronic data processing equipment and the data stored on it from various risks such as damage, theft, fire, and other similar incidents.
This insurance coverage is designed to protect businesses from the financial losses that could arise due to loss or damage to their electronic equipment and data, which are critical to their operations. This type of insurance coverage can also include liability coverage for data breaches or other cyber incidents that may result from the loss or damage of electronic equipment.
How Much Does Electronic Data Processing Equipment Insurance Cost?
The average price of a standard electronic data processing equipment insurance policy for small businesses ranges from $27 to $49 per month based on location, number of pieces of EDP equipment, claims history and more.
What Property Does Electronic Data Processing Equipment Insurance Cover?
All hardware is covered for the limit on the electronic data processing equipment insurance declarations. There is no requirement to list each piece of equipment individually.
The following groups of software listed on the declarations have separate limits:
- Programs and Applications - These items have a defined value because they were purchased as part of the hardware package or were purchased separately and added.
- Data Records
- Proprietary Programs - These items are more difficult to value because each one must be recreated internally. Coverage includes the costs to research and reproduce the information.
On-site and off-site website servers can also be covered. The coverage provided is similar to the coverage that applies to hardware and software.
What Property Does Electronic Data Processing Equipment Insurance Exclude?
PROPERTY NOT COVERED
The following property is not covered:
- Accounts, records, bills, abstracts, manuscripts, evidences of debt, deeds, program documentation, or other documents that are not in electronic format.
- Portable computers and similar electronic devices but only when checked as luggage and only for the perils of disappearance and theft.
- Contraband - This includes legal property in the course of illegal transportation or trade. Note: An employee could use the insured's computer for illegal trade. In this case, the computer is excluded.
- Property the insured rents, leases, or loans to others.
- Money and securities - This also includes currency, lottery tickets not held for sale, food stamps, and notes.
- The insured's stock in trade that consists of computers or software.
- Loss of a web host or Internet service provider due to either's bankruptcy, liquidation, or otherwise going out of business
What Hazards Does Electronic Data Processing Equipment Insurance Cover?
Electronic data processing equipment insurance coverage applies to risks of direct physical loss, except those specifically excluded.
What Hazards Does Electronic Data Processing Equipment Insurance Exclude?
HAZARDS NOT COVERED
There is no coverage for loss due to:
- Computer hacking and computer virus - except as a supplemental coverage (There is no coverage when a computer is compromised by a virus or hacking.)
- Contamination or deterioration
- Criminal actions by the named insured, officers, directors, or employees (There is coverage if employees destroy property but not if they steal anything.)
- Delay or loss of market
- Dryness or dampness of atmosphere, extremes of temperature, corrosion or rust unless directly resulting from physical damage to the data processing system's air-conditioning facilities caused by a peril not otherwise excluded
- Standard property exclusions - civil authority, earth movements, flood, nuclear hazard, sewer backup, and war
- Voluntary parting where someone is tricked or deceived into giving property away
- Wear, tear, depreciation, or obsolescence
What Are Electronic Data Processing Equipment Insurance Endorsement Options?
ELECTRONIC DATA PROCESSING EQUIPMENT INSURANCE COVERAGE EXTENSIONS
The limit for each of these electronic data processing equipment insurance extensions is on the declarations. They are not subject to any coinsurance provisions in the coverage form.
This is similar to the debris removal extension in the commercial property coverage forms.
Electrical And Power Supply Disturbance
This includes brownouts and blackouts that can result in data being erased.
This is similar to the preservation of property extension in the commercial property coverage forms.
Emergency Removal Expenses
There are expenses the insured incurs when property is moved. This extension pays for such expenses but subject to a sublimit.
Fraud And Deceit
There is no electronic data processing equipment insurance coverage for loss or damage to property voluntarily given to others. However, this extension gives the insured a small sublimit of coverage if the property was voluntarily given away due to deception or that involved accepting fraudulent bills of lading or shipping receipts.
Mechanical Breakdown Coverage
Loss due to parts or components of the hardware failing to work or to function improperly is covered. This includes loss due to improper installation.
The following supplemental electronic data processing equipment insurance coverages on the declarations are subject to either the default limit in the coverage form or the limit on the declarations, whichever is higher. The limits are not combined:
The insured may acquire a new location. If it does, a specific limit applies to that location for up to 60 days. The insured must report the acquisition to the insurance company and pay premium back to the date the location was acquired.
This coverage applies ONLY if there is a limit for it on the declarations.
This coverage applies ONLY if there is a limit for it on the declarations.
Newly Purchased Or Leased Hardware
The insured may purchase or lease new hardware. If it does, a separate limit applies to the hardware and to the programs that come with the hardware for up to 60 days. The insured must report the purchased or leased hardware to the insurance company and pay premium back to the date it was purchased or leased.
This supplemental electronic data processing equipment insurance coverage insures computers that are with the insured, partners, or employees when in transit or at their homes.
Pollutant Cleanup And Removal
This supplemental coverage is similar to the coverage provided in a commercial property coverage form.
Property In Transit
This supplemental coverage's default limit is $10,000.
Protection And Control Systems
The insured may have equipment that protects and controls the computers. In that case, a separate limit applies to damage to that equipment that a covered cause of loss/peril causes.
Recharge Of Fire Extinguishing Equipment
This supplemental electronic data processing equipment insurance coverage is similar to a similar coverage described with the commercial property coverage form.
This supplemental coverage insures equipment that scans, copies, stores, or retrieves paper documents for up to a separate limit.
This supplemental coverage pays a reward of up to a small limit in a single occurrence for information that leads to the conviction of the individual(s) who commit a covered arson, theft, or vandalism of the insured's electronic data processing property.
Sewer Backup And Water
This coverage applies ONLY if there is a limit for it on the declarations.
This supplemental coverage encourages the insured to back up its software. It provides a separate limit to apply to damage to backed up software kept offsite. The site must be at least 100 feet away from the insured premises.
This supplemental coverage insures telephones and similar types of communication equipment for up to a separate limit.
Virus and Hacking Coverage
Hardware, software and the web server are covered for virus and hacking damage for up to a separate per occurrence limit that is subject to a separate annual aggregate limit.
OPTIONAL ELECTRONIC DATA PROCESSING EQUIPMENT INSURANCE COVERAGES
This electronic data processing equipment insurance coverage form does not end with just the coverage listed above. Other coverage forms and many endorsements are available and the list continues to grow.
EDP coverage must adjust rapidly and often to stay current with changes in technology.
When reviewing any EDP coverage, it is important to determine the coverage form's edition date and the date it was created. Another coverage form should be considered if the definitions do not reflect current terminology.
The inland marine marketplace has many companies that are willing to write EDP and that understand that a "one size fits all" coverage form is not the right coverage for more technologically advanced companies.
What Does Electronic Data Processing Equipment Insurance Cover & Pay For?
Here are some examples of Electronic Data Processing Equipment claims and how Electronic Data Processing Equipment insurance can help pay for the lawsuit:
- Data breach: If a company's electronic data processing equipment, such as servers or computers, is hacked, resulting in a data breach where sensitive customer information is compromised, the affected customers may file a lawsuit against the company for failing to adequately protect their data. Electronic Data Processing Equipment insurance can help cover the costs associated with defending against the lawsuit, including legal fees, settlements or judgments, and notification and credit monitoring services for affected customers.
- Equipment failure: If a company's electronic data processing equipment experiences a mechanical or electrical failure, resulting in loss of data or business interruption, the company may suffer financial losses and may be liable for any damages incurred by their clients or customers as a result. Electronic Data Processing Equipment insurance can help cover the costs of data recovery, repair or replacement of damaged equipment, and business interruption losses, as well as any legal claims arising from the incident.
- Intellectual property infringement: If a company's electronic data processing equipment is used to store or process copyrighted, patented, or trademarked material without proper authorization, the company may face a lawsuit for intellectual property infringement. Electronic Data Processing Equipment insurance can help cover the costs of defending against the lawsuit, including legal fees, settlements or judgments, and damages awarded to the aggrieved party.
- Cyber extortion: If a company's electronic data processing equipment is targeted by cyber criminals who demand a ransom in exchange for not releasing sensitive data or disrupting the company's operations, the company may face financial losses and potential legal liabilities. Electronic Data Processing Equipment insurance can help cover the costs of negotiating and paying the ransom, as well as any legal claims resulting from the incident.
- Business interruption: If a company's electronic data processing equipment is damaged or becomes inoperable due to a covered event, such as a fire, flood, or earthquake, resulting in a temporary halt to the company's operations, the company may suffer financial losses due to lost revenue and ongoing expenses. Electronic Data Processing Equipment insurance can help cover the costs of lost income during the period of business interruption, as well as any additional expenses incurred to restore or replace the damaged equipment.
It's important to note that coverage and claim payments under an Electronic Data Processing Equipment insurance policy may be subject to specific policy terms, conditions, and limits. It's recommended to review the policy carefully and consult with an insurance professional to fully understand the coverage and how it may apply to your specific situation.
Electronic Data Processing Equipment Insurance - The Bottom Line
Standard commercial property policies provide limited coverage for your computers and related hardware. Electronic data processing equipment insurance helps to pay to research, replace or repair lost or damaged data and software as a result of covered damage to computer equipment including certain power failures, computer viruses or hacking activity. There are many options and speaking to an experienced broker can help businesses find the best fit policy.
Additional Resources For Commercial Property Insurance
Read up on small business commercial property insurance, including how business property insurance protects your company's building's and/or their contents from damage, destruction, theft and vandalism.
- Apartment Building
- Business Interruption
- Commercial Flood Insurance
- Commercial Property
- Condo Association
- Contractors Equipment
- Duplex Rental Property
- Equipment Breakdown Protection Insurance
- Homeowners Association Insurance
- Inland Marine
- Jewelers Block
- Manufacturing And Mercantile Rental Property
- Mobile Home Park
- Non-Residential Building Operators
- Office Buildings
- Shopping Center & Strip Mall
- Vacant Land
- Vacant Property
- Specialty Habitational
- Specialty Inland Marine
- Specialty Property
Commercial property insurance is a type of insurance that provides coverage for businesses against losses or damages to their business property. This can include buildings, equipment, inventory, and other assets owned by the business.
There are several types of commercial property insurance, including standard property insurance, business interruption insurance, and contents insurance.
- Standard property insurance covers damages to the physical structure of the business, such as the building, walls, and roof.
- Business interruption insurance covers lost income and expenses incurred during the repair or rebuilding process.
- Contents insurance covers damages to personal property within the business, such as office equipment and furniture.
Commercial property insurance is important for businesses of all sizes, as it helps protect against financial losses due to unforeseen circumstances, such as natural disasters, theft, or vandalism. It can also provide liability coverage in case of accidents or injuries on the business property.
To determine the appropriate level of property insurance for a business, it is important to consider the value of the business's assets, the location of the business, and the potential risks it faces. Many businesses choose to work with an insurance agent or broker to help identify the best coverage options for their specific needs.
Overall, commercial property insurance is a crucial part of any business's risk management strategy, helping to protect against financial losses and ensuring the long-term viability of the business.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Signs, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Contractors' Equipment, Fine Arts, Cyber Liability, Employment-related Practices, Automobile Liability and Physical Damage, and Stop Gap Liability.