Electronic Equipment Insurance: Definition, Coverage & Benefits

All businesses make use of electronic equipment in their business operations. They help the business from reaching local to global. These devices play an integral role in the expansion of the business network. The outgoing traditional ways of data exchange are replaced with electronic data. Any problem with these devices can end up hampering the work leading to a financial loss. To bypass this problem, opting for electronic equipment insurance is the need of the hour.  

What is electronic equipment insurance?

With the increased reliance on technology, breakdown of any form can be sufficient to have a financial impact. All organisations use electronic devices to facilitate their day-to-day operations. From computers to industrial equipment, medical devices to electronic cash registers, all are crucial to your business operations. Using a commercial insurance policy that covers any repairs or damages to your electronic devices helps your business operate seamlessly.  

What are the sections of electronic equipment insurance?

General insurance that covers your electronic devices is classified into three sections-  

Equipment cover

Any damage to your electronic equipment is covered under this section of your policy. The insurance company includes the damage due to sudden physical loss including partial loss. Any such damage will be insured by way of a repair or replacement. This amount is subject to the maximum sum assured as per the policy.  

External Data Media Cover

There are instances where your disk drive or any other storage device malfunctions and the data is no longer available. In such situations, if the policyholder has opted for an electronic equipment insurance plan, it offers a financial cover for recovering the lost data. This data might be vital for your organisation, and the monetary effect can be huge.  

Increased Cost of Working Cover

When there is unforeseen damage to a data processing unit, an alternative unit is required to be set up. This policy offers financial assistance for setting up such an additional processing unit covering its cost for hardware as well as human resources.  

What is the coverage under electronic equipment insurance?

General insurance covering your electronic devices is must for small business owners as well as large organisations. It covers the following areas -   Coverage for damaged equipment - Any repairs or replacement to the insured equipment are included in its coverage. It further includes ancillary costs like freight, erections and custom duty in cases of heavy machinery or imported equipment.   Coverage for damaged data media - The lost information that is crucial for your business operations is covered under electronic equipment insurance.   Cost of working - The cost of reconfiguration of the entire process in case of data disruption, which leads to increased resources in the form of equipment and labour are covered under your electronic equipment insurance.   Software damage - An electronic equipment insurance not only covers the hardware costs but also includes the cost of software for the hardware.  

What are the benefits of using electronic equipment insurance?

Some of the benefits of buying electronic equipment insurance are -

• The total cost of damage or loss to electronic equipment and data is insured under this policy. It excludes the depreciation element of such equipment.
• Any labour cost, which increases the operational costs like overtime, double pay and night shifts are borne under the policy.
• In case the replacement to the equipment is not possible, the insurer indemnifies the cost of repairs to the policyholder.

  Keep in mind the common exclusions to electronic equipment insurance -

• Regular wear and tear with usage are specifically excluded under this policy.
• Overhaul and modification of equipment and data that causes damage.
• Intentional negligence during use on the part of the policyholder.
• Any consequential loss to the equipment due to other factors is excluded.
• Aesthetic defects like scratches on painted or enamelled surfaces.
• Any false programming, labelling or inadvertent cancelling of information and discarding of data that leads to additional cost.

  To conclude, commercial insurance protecting your equipment and data comes handy in times where there are disruptions due to factors beyond your control. Availing an insurance policy that covers these unexpected costs will help in smooth business operations.