I can run my business from Hawaii.

For those of us that remember using carbon paper to create a copy of a document, technology is the greatest.  Virtual offices, telecommuting, and all forms of working remotely have changed the face of the standard business model.  Maynard Webb, the Silicon Valley VC that recently wrote a book entitled, “Rebooting Work”, encourages business to find the best talent and let them work from wherever they want.  Millions upon millions of dollars have been carved out of the rent expense entry on financial statements across the country.  But what happens when the computer system that your company runs on is crushed by a virus, malicious attack by a departing worker, an outside hacker, or perhaps an innocent mistake by an employee.

Most business owners will pull out their Commercial Business Package insurance policy.  After all, the agent told them that it was very comprehensive.  Unfortunately, the common property insurance carried by a small business covers only losses to tangible property.  This sure seems tangible.  The significant loss of dollars as the online sales go to zero seems very tangible.  The business owner will soon learn that the loss of digital assets does not fall under the definition of Business Personal Property and are not covered by the policy.  Likewise, the Loss of Income is also not covered because the business did not first suffer a covered property loss.

Data Losses to a Business can be Devastating

In some cases may cause a company to fail.  A loss to data can come in several different forms including the following:

  • Malicious destruction of data
  • Computer virus
  • Accidental damage of data
  • Human error
  • Power supply failure which damaged data
  • Malfunction of IT system
  • Cyber extortion threats
  • Natural disasters
  • Unauthorized Access

On April 16, 2013, American Airlines suffered a system failure which grounded all of their flights for hours and resulted in the cancellation of more than 400 flights and customer refunds.

The good news is that in most cases, coverage is available and can be tailored to best address the exposures of the business.  Most policies include the following coverage:

  • Loss of Digital Assets
  • Non-Physical Business Interruption and Extra Expense
  • Cyber Extortion
  • Cyber Terrorism
  • Security Event Costs

Be sure to review this coverage with your agent.