Electronic Data Processing Equipment Coverage
Electronic data processing equipment insurance, often shortened to EDP, protects hardware, data and media from damage. It fills gaps that are present in standard business property coverage and is essential for businesses that depend on computers and technology to carry out their operations. This coverage can be written as a standalone policy or as an endorsement to an existing business property policy.
FAQs
Hardware
Hardware includes equipment like computers, tablets, smartphones and servers. It may also include phone systems, printers, scanners and other equipment (like air conditioners) used exclusively for computers. Making sure you understand how “hardware” is defined in your EDP policy is important to ensure you have coverage for your business assets. You’ll also want to make sure you have coverage for leased equipment if you don’t own your hardware.
Data/Software
Data refers to computer programs and software, including system software, applications and proprietary programs as well as the data stored on such systems.
Electronic Media
Electronic media is typically defined as a device on which data is stored. Some examples include discs, memory cards and tapes. Certain policies have electronic media as a separate category, while others include it as part of data.
Causes of Loss
Like other types of business property, electronic equipment can be damaged by fire, water and other common perils. Unlike standard property insurance, many EDP policies include coverage for flood and earthquake. Electronic data processing equipment is also vulnerable to more unique perils, such as the below:
- Viruses and hacking
- Power surges
- Temperature changes
- Humidity changes
- Electrical disturbances (like arcing and short circuits)
- Utility service interruption
- Mechanical breakdown
Valuation Type
There are several different ways that insurance carriers value EDP equipment. If data or software is damaged or destroyed, your policy may cover the cost to reproduce the data, including research, if reinstallation isn’t a viable option.
- Replacement cost is the cost to replace property with property of a like kind and quality.
- Actual cash value is calculated based on the cost of the item new, less depreciation.
- Function replacement cost is the cost to replace an item with a functionally equivalent one and is common for property types that undergo frequent technological changes.
Business Income and Extra Expense
Your business may depend on computers electronic data to function and damage or destruction of that property could result in your business shutting down, leading to a loss of income. Business income coverage can help you recoup lost income during your downtime and with expenses like renting other equipment and moving locations. Most EDP coverage includes business income and extra expense coverage to contemplate this type of scenario.
Other Coverages
Some policies may include the below coverages automatically, while others may be able to endorse them onto to the policy for additional premium.
- Equipment in transit
- Offsite equipment
- Newly acquired equipment
- Equipment at newly acquired locations
If your business uses portable electronic equipment, such as laptops, you’ll want to make sure your coverage includes offsite equipment.
Exclusions
Every insurance coverage contains exclusions. Some typical exclusions on EDP policies include:
- Property that is lost or stolen
- Physical property like bills and paper records
- Equipment that is being used for illegal purposes
Cost
Electronic data processing insurance
costs can vary depending on the type of equipment, value of equipment and
location of the equipment.