Electronic data processing insurance

EDP insurance covers your electronic data processing equipment, such as computers and backup systems, against data loss during a power surge, fire, natural disaster, or similar incident. The devices it insures include:

Desktop computers, laptops, mainframe computers, and workstations are all covered by EDP insurance. Your policy might also cover copiers, scanners, telecommunications equipment, and networking devices. It also includes cooling systems used to keep your devices from overheating.

This includes your data storage devices and the information they contain, such as customer information and accounting data. It also includes software such as computer programs, operating systems, and any proprietary programs your business uses.

This includes anything that retains data, such as external hard drives, USB drives, magnetic tapes, and network storage servers.

Smartphones, tablets, and other mobile devices are also covered by an EDP policy, which protects both the device and its data.

An electronic data processing insurance policy can cover the replacement cost of your computer equipment based on two valuation options.

Your covered property can be insured for its:

• Actual cash value (ACV), which reimburses you for the current value of the item, also known as its depreciated value.
• Replacement value, which covers the cost of buying a brand-new piece of equipment.

If your policy covers the replacement value, you’ll be more financially protected against a loss, but you’ll pay a higher premium. Insuring for the actual cash value will reduce your premium, but you’ll face an extra expense if you want to upgrade to newer equipment.

Electronic data processing insurance typically covers a wide range of events, including risks not typically included in standard commercial property insurance.

Events that your EDP policy may cover include:

• Electrical disturbances, such as power surges (though not from power companies)
• Mechanical breakdowns
• Changes in humidity and temperature
• Damage from computer viruses, hacking, and cyberattacks
• Offsite data storage
• Short circuits
• Earthquakes
• Fire
• Wind
• Floods

Although EDP coverage usually insures against electrical disturbances and power surges, it does not cover data losses and damage caused by a third party, such as a utility interruption.

This means you wouldn’t be covered if equipment damage or data loss is caused by a loss of power from the electrical company, or if a power surge causes a loss when the electricity comes back on.

To ensure you have coverage for situations like these, you would need to look into an electronic data liability endorsement.

Data loss or damage caused by human error may also be an exclusion from EDP insurance. For example, if you or an employee make a mistake in backing up data or installing your computer systems, the insurance company might not cover the loss.

Professional liability insurance, also called errors and omissions insurance, can cover lawsuits over professional mistakes, including undelivered services and missed deadlines.

Your electronic data processing insurance might also exclude equipment that is lost or stolen.

However, if you have commercial property coverage, this can help pay for items that are damaged, destroyed, stolen, or lost.

EDP insurance is typically purchased as an endorsement to a business owner’s policy (BOP). A BOP combines both general liability insurance and commercial property insurance coverage, and is usually less expensive than buying each policy separately.

Electronic data processing coverage can also be added to a commercial package policy (CPP), which is similar to a BOP, but is generally purchased by high risk small and medium-sized businesses. You can also add business interruption insurance and cyber insurance to a BOP.

Business interruption insurance protects your business against financial losses if you must temporarily close or relocate due to a catastrophic event, such as a fire. It can help pay for your lost income, business expenses, and rent or relocation costs.

Cyber liability insurance offers financial protection against malicious software attacks, cyber hacking, and data breaches. It covers the cost of notifying customers, credit monitoring, legal fees, and fines.

Complete Insureon’s easy online application today to compare insurance quotes from top-rated U.S. carriers. You can also consult with an insurance agent on your business insurance needs. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.