Insuring Computers, Data and Media

Virtually all schools rely upon their computer and data management systems to conduct business efficiently and effectively. Technology is a substantial investment, and you must be adequately insured against loss of hardware and essential data. Most property policies for schools provide limited coverage for computer equipment and exclude losses specific to data, media, and losses caused by computer viruses or hacking.

Electronic Data Processing (EDP) insurance is designed to cover the unique risks associated with computer operations. EDP policies typically include three coverage components:

1. EDP Equipment- The servers, computer terminals, monitors, laptops, etc.
2. EDP Media- The disk drives, disks, magnetic tapes, etc., on which data is stored.
3. EDP Data- The information stored on the media, such as facts, concepts, programs, and additional expenses associated with data recovery.

The Equipment and Media sections are within the property coverages. Given the volatility of technology equipment values, the most critical concerns are determining adequate limits and understanding the policy’s terms. Equipment and Media coverage can be written on either a replacement cost or actual cash value basis.

Since data is often difficult to replace or retrieve, it is often the most important coverage component of the EDP policy. It is also the most challenging one to insured effectively. Data coverage is not standardized in the insurance marketplace; carriers may define data differently and offer different coverage forms. A close examination of your policy’s terms is necessary to determine the adequacy of your data coverage. Some important considerations are:

1. Does your policy provide coverage for losses caused by viruses and hacking?
2. Does it include coverage for a denial of access?
3. Does it provide business interruption and extra expense coverage?
4. Does your policy cover the expense of hiring a forensic expert if you are hacked?