The data and software used by many businesses represents a major business asset. Since electronic media and programs are not physical objects, covering them with property insurance is difficult. It is important for business owners to understand how their particular policy handles electronic media coverage. Many business are surprised to find that the majority of their media is not covered at all or is covered only to small amounts.
How Electronic Media and Software is Covered in Most Policies
Many commercial property insurance policies don’t have any coverage at all for electronic media. The actual hardware, such as computers, printers, servers and such usually are covered, but anything stored on those devices is not. This includes company-specific data that is often more valuable than the hardware it is stored on.
Coverage for electronic media usually comes in the form of some kind of additional coverage added onto the basic policy. These coverage amounts are typically very small, under $3000 in most cases. It is also important to understand that this coverage may not apply to any instance of loss or damage. Many common reasons for data loss, such as power surges, do not apply.
A policy can include all-risk additional coverage in order to secure electronic data from most causes of loss. It is important to check that the policy has this wording specifically. If it doesn’t, then the coverage either does not exist at all or covers only very specific causes such as lightning or fire.
Considerations for Purchasing Additional Coverage
The best way to protect electronic media through insurance is with additional coverage clauses added onto the policy. This can get expensive quickly, and a business may never be able to get enough coverage for everything that could be lost. The actual value of some of this data is also hard to determine. While specific hardware can be priced, it is much more difficult to determine the dollar value of company-specific data, records and such.
Property insurance may not be the best way to protect data and information stored on computers and servers. While it is a good idea to purchase whatever additional coverage is affordable, there are many other options available for protecting data. In general, most data and programs can be backed up or stored using off-site services or cloud-based platforms. This is not truly insurance, but it can serve to protect the media from loss, even if the hardware owned by the business is lost or destroyed. While there is some risk in storing data on third-party servers, specific laws prohibit the unauthorized use or access of the data.
One of the best ways is to use outside servers and data centers. These businesses are entirely devoted to the storage and protection of electronic media, business information and software. Since the servers for this information are stored in a separate and secure facility, loss or damage to a business property will not affect it. Even if a business’s private computers are destroyed, their data will be saved. Data centers usually have their own insurance to cover the loss of customer information.
Property insurance is not a catch-all insurance to cover any type of asset loss for a business. Especially when it comes to electronic media and data, property insurance coverage is usually sparse. A business owner is wise to look over their policy options carefully to ensure they have the additional coverage they need. They may also want to seek outside help from data center services and other digital storage providers in order to protect their valuable media.