General Practice, Solo & Small Firm DivisionMagazine
Volume 17, Number 1
Business Interruption Insurance
Although you probably have office property insurance, most office property insurance does not cover some very specific events that affect computer systems such as electrical arcing (which occurs when the insulation between two wires deteriorates, causing the current to "arc" between the two wires), mechanical failure, or computer viruses. It also typically does not cover costs to recover or reconstruct information regardless of the cause for loss.
Every business should insure its computer hardware under a separate policy, and most insurance companies offer polices that cover these types of events. In order to get an appropriate policy, estimate the cost of hardware and software plus the cost to rebuild the information. Typically, you will pay a 15 to 20 percent premium on top of what you would pay for standard property insurance.
Other types of insurance available to deal with disasters include:
- Offsite operations. Covers the cost of operating systems from a remote site should the original computer facilities be inoperable.
- Loss of record. Covers the value of specific data should it be lost and unrecoverable. You have to be able to determine the value of the data as well as prove it is unrecoverable to make a claim (both of which can be hard to do).
- Loss of income. Covers loss of income in the event of a disaster. Again, you have to be able to demonstrate the loss was related to the disaster. Sometimes this is covered under the main insurance policy.
These and other types of business interruption insurance vary from insurance company to insurance company. To tailor the best plan for your business, contact your insurance agent.