Though you may already have insurance for building contents under your commercial property policy, you may also need protection for your electronic equipment. This is especially important if you have many servers, computers, communication towers or other expensive electronic equipment.
There are certain industries where a commercial property policy may fall short in protecting against losses involving electronic equipment. These industries include medical facilities, manufacturing and production, engineering and telecommunications, energy and mining, and laboratories.
Businesses often add a section to their property insurance policy called an inland marine endorsement. This addendum lists specific equipment to be insured beyond what the standard property policy permits. But it may be limited to the hardware itself and exclude equipment failures.
A broader protection
A dedicated electronic equipment insurance policy may be more suitable if your business requires coverage for breakdowns, data, viruses and extra expenses.
If you have an inland marine equipment endorsement, it will likely cover any damage to or loss of your electronic equipment due to fires, storms, leaking pipes, vandalism and other covered perils. An electronic equipment policy will pick up where that policy leaves off.
It will typically include electronic equipment breakdown insurance, which addresses short circuits, power surges and other electrical disturbances. It may also cover damage from malicious software and off-premises utility interruptions, depending on the options you choose.
One of the benefits of an electronic equipment policy is that it often covers data, media and some software as well. Think of the cost to a recording or television studio if an album or show had to be rerecorded or to a lab if a trial had to be repeated because of an electronic equipment failure or loss. Let us know if you are in a business where a loss of data or compromise of your software would be financially devastating.
Note that electronic equipment policies generally don’t include commercial software applications. Instead, they are meant to insure software written for a business’s proprietary use. These businesses include engineering firms, video game designers and pharmaceutical manufacturers.
You may be able to insure a special system separately, as needed. You can also cover all your electronic equipment under a blanket form that applies one payout limit across the equipment included in your policy. Which you choose will depend on the value of the equipment you wish to insure. We will work with you to establish an accurate valuation of your equipment, media and data so that the cost to repair, replace or restore it is appropriately covered.
Many policies include business interruption coverage, which helps maintain revenue if an equipment failure shuts down your operations. If you choose a policy with “extra expense” coverage, you will have access to funds to lease new equipment while yours is being repaired. It will also cover the cost of hiring technicians who can rapidly restore your files and systems so you can get back up and running quickly.
Ask us about coverage for mobile electronic equipment if you use crucial items off-site. Not all policies cover equipment when it’s in transit or being used off-site, so it’s important to discuss this protection if you transport your electronics. This applies to data and media as well.
For things like antennas and transmission equipment that are built into vehicles, make sure your coverage extends to those apparatuses. There may be some interplay with your business auto policy.
The value of a specialist
Insuring electronic equipment and data is complex, especially since every industry has its own unique risks. For example, a chemical lab has a much different exposure to loss than a mobile news outlet. You may need to work with a specialist in your industry and a specialist in electronic equipment coverage. The key is to thoughtfully consider your own risks, the costs of recovering from various kinds of incidents and what level of backup you have should a loss occur.