More and more, Natick businesses are relying on electronic data to conduct business. This can take the form of client records, gathered data from experiments, business reports, and more. With so much hinged on your computers and stored data, does your small business insurance protect you if it’s lost? The answers can be complicated.

Small Business Insurance and Your Data in Natick and Beyond

Your data is valuable to your business, but insurance coverage for it can be complex. Data is not considered physical property, and is therefore not subject to the same property and liability coverages as other items are. While your computers may be covered if there’s a fire, data loss from a power surge is often excluded. To properly protect your Natick business, you need to be aware of your insurance coverage for data.

Common Exclusions

Many small business insurance policies will cover some amount of data recovery costs. Some of the most common exclusions to these policies are also the most common causes of data loss. These include:

• Power surges
• Short circuits
• Damage caused by magnetic fields
• Temperature or humidity changes
• Malicious attacks.

Also often excluded is liability coverage if you accidentally cause a third party to lose data, whether through a virus or damage to their system.

Small Business Insurance for Data

If your Natick business, like many, relies on electronic data, you may want to purchase additional insurance to provide you some data protections. For many businesses, the most important coverage is cyber insurance, to cover the expensive costs of a data breach.

Cyber-attacks and data breaches are typically extremely costly. From notifying clients that their data has been compromised to paying for identity theft protection, fines, and added network security, the costs can easily run into the tens of thousands of dollars very fast. Cyber insurance can provide important protection for data breaches, including legal fees from lawsuits that may result.

If you need more coverage for your data, Electronic Data Processing Insurance and Electronic Data Liability coverage are also available. These specialized policies can help pay for the recovery and lost business both to your business and third parties.

Protect Your Data

While you can – and often should – purchase insurance to protect your business financially against data loss, experts advise that the best protection is to implement security strategies prior to data loss happening. To protect your data you should:

• Regularly back up all data, preferable to an off-site storage location.
• Implement network security, including firewalls, secure passwords, and encryption.
• Train all employees on proper data security techniques.
• Install power surge protection.

By protecting your data, your business is at a lower risk for data loss. Your insurance company may require you take some of these steps prior to issuing a data protection policy.

If your Natick business, like many others, relies on digital data to conduct business, you may not have enough protection with a standard small business insurance policy. You should consult your local insurance agent to find out the limits of your protection and discuss other insurance options to protect your business in case of data loss from a cyber-attack, physical damage, or other event.

This material is for informational purposes only.  All statements herein are subject to the provision, exclusions and conditions of the applicable policy.  For an actual description of all coverages, terms and conditions, refer to the insurance policy.