Computer insurance fills significant underinsurance gap

Having specific cover for your computer and electronic equipment may seem a luxury but, after all, you can claim for loss and damage on your property insurance policy, can’t you?

The answer to that is likely to be ‘no’. Following major cyber-attacks in the past seven years, insurers and insureds were often debating whether vague policy wordings actually provided cover for cyber-related losses.[1] In the past three to four years, the insurance industry has tightened up wordings, eradicating ‘silent cyber’ coverage. Now your property policy is likely to specifically exclude any cyber- related losses, which could run to eye- watering amounts.

Businesses not working closely with a broker may not realise this — which is serious when hacking, viruses and corruption of company data are on the rise.

32% of businesses (59% of medium-sized and 69% of large) recalled a cyber-attack in the year to April 2023.[2] Cyber criminals scan any device connected to the Internet at least once every 30 seconds, seeking potential weaknesses.[3]

Your property insurance may, however, do more than exclude cyber-crime-related computer damage. Most policies only cover hardware stolen or damaged by a fire, flood or storm, and will not provide compensation for software or data. Some of this could be fundamental to the running of your business. Cover is frequently also restricted to incidents occurring on the business premises, not outside.

With the increase in hybrid working, shared workspaces, working on the go and also from home, this is problematic. Of employed and self-employed workers, 46% have experienced lost or damaged computer equipment whilst working from home or commuting to the office.[4]

A computer insurance policy can step in here, covering losses that a property

policy cannot. Take, for instance, theft by a third party who has not forced entry, or computer cables chewed by vermin or pets. Perhaps damage caused by a power failure or interruption of the power supply, or spillages and accidentally damaged laptops?

Such policies define ‘computer’ broadly, including items such as mobiles, PCs and laptops, removable sat navs, broadband modems, digital cameras and projection equipment, and audio-conferencing equipment and photocopiers.

Options to extend the cover also exist. You could protect yourself from increased costs, such as overtime or rental of temporary premises following an incident. You could also add cyber liability cover.

Recreating data is often more expensive than the cost of replacing a laptop or PC, so having a means to pay experts to do this can be invaluable, however the data was lost. Lost databases, stock inventories and records can all be covered, with data ‘found’ or rebuilt by IT gurus.

Remember that ransomware attacks are commonplace, and the National Crime Agency advises against paying ransoms to criminals.[5] A system could still be infected and the criminals could return. Arm yourself with a good computer insurance policy, and you can enjoy restored and unencrypted data in a fast time frame.

To summarise, a specialist computer policy covers losses for which so many businesses are not insured. Don’t let it be you, especially when we’re here to help you cover those gaps.

Sources:

[1] https://www.irmi.com/articles/expert-commentary/end-of-silent-cyber-in-property-insurance

[2] https://www.gov.uk/government/statistics/cyber-security-breaches-survey-2023/cyber-security-breaches-survey-2023

[3] https://newsroom.bt.com/cybercrime-more-than-500-potential-attacks-clocked-every-second/

[4] https://www.munichre.com/hsbeil/en/about-us/hsb-engineering-insurance/press-and-news/press-releases/2023/Two-thirds-of-firms-havent-considered-computer-risks-HSB-research.html

[5] https://www.nationalcrimeagency.gov.uk/what-we-do/crime-threats/cyber-crime