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Data and Computer Exposure Risks

To help manage the risks associated with electronically transmitting and storing sensitive data, many businesses choose to purchase automatic data processing insurance. Because policies cover varying aspects of computer and data exposure incidents and their associated remediation costs, it is important to understand the scope of any coverage.

Reasons for Data Loss

Data loss can occur for several reasons. When evaluating automatic data processing insurance policies, consider whether losses are covered when the following types of events occur:

  • Computer virus
  • Accidental data erasure
  • Employee sabotage
  • Denial of access or hacking events
  • Environmental issues such as excessive heat, freezing temperatures or water damage
  • Electrical damage

Types of Expenses Covered

Insurance policies typically define the types of expenses that will be covered. Confirm that any valuable, at-risk data falls within the policy coverage. Verify whether business interruption expenses and the cost to hire a forensic expert for problem diagnosis and resolution is included. Should the company be required to notify customers, employees or government agencies of the data loss, know how any expenses for those activities will be handled.

Confirming Policy Scope

There is typically very little standardization between automatic data processing insurance policies. To make sure that business operations are fully covered, it is important to understand both the types of losses that fall within the scope of the coverage and which expenses will be paid for under the policy.