ADJUSTERSINTERNATIONAL.COM 5 Still a Critical Coverage All of these coverages can come into play with a loss to records that have no duplicates and must be reconstructed. In the case of a loss to paper or other “hard copy” records, only valuable papers and records coverage will respond for the purposes of researching them for restoration. That’s why it continues to be a critically important coverage. It follows, then, that any VPR limit, built in or added by an inland marine policy or endorsement, should be applied first to the costs of reconstituting non-electronic records — even if, as with the ISO Businessowners form, it may be theoretically possible to apply that limit to other types of records. Losses to electronic records can potentially be addressed under three different coverages, if present: • A built-in or declared sublimit under the building and personal property coverage, subject to the policy deductible; • Inland marine coverage, subject to its own limit(s) and deductible; and/or • Cyber insurance, subject to a specific policy’s definition of insured perils and the corresponding sublimits and deductibles. Coverage Considerations Given the potential for coverage under various policies for loss to business records, there are several key considerations for structuring coverage: • What versions of forms are being used? Older property forms may have a broader application of records coverage than newer ones, but without the additional limit for electronic data. • Where might a loss to data occur? Coverage under property forms may be limited or not apply to losses occurring away from an insured location. That’s less likely under inland marine forms, but still possible, and less likely still under cyber policies which are typically written to cover data wherever it is hosted. • What about losses due to physical damage? Some cyber policies will exclude such losses, presuming the property coverage will pick it up. • Howmuch will reliance on the cyber policy deplete its aggregate limit? Can coverage for restoring records be found elsewhere to avoid that? It’s hard to predict how such losses will occur, but insurance and risk management professionals can distinguish themselves and best serve their clients by considering and preparing for the many possibilities. Cyber insurance policies combine first-party coverage for loss to data and equipment with liability coverage for losses to third parties, along with coverage for expenses incurred for forensic investigations, notices to affected persons, public relations after an incident, and other purposes.
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