Electronic Data Processing (EDP) Coverage


Electronic data processing (EDP) exposures are simply not addressed in an adequate fashion by a standard property insurance policy. Electronic data processing equipment and software are particularly susceptible to:

  • Damage from electrical or magnetic disturbance
  • Changes in temperature or humidity
  • Perils which are excluded in a standard property policy

Coverage for custom software is often limited to replacement with blank tapes or diskettes plus transcribing expense. Business interruption coverage in connection with damaged software is usually limited to 60 days. Therefore, if the building repairs are complete, but normal operations cannot resume because replacement computer programs are not readily available, there can be a sizable gap in coverage.

Special EDP Policies

EDP policies typically provide coverage for perils that would impact other types of property, but they are expanded to include such perils as electrical and magnetic damage, mechanical breakdown and damage from temperature and humidity changes.

Provisions to Watch For

  • Expect EDP coverages to carry a higher deductible
  • Consider whether you need replacement cost coverage or actual cash value
  • Decide between blanket coverage and scheduled coverage
  • Read the policy to determine whether it covers reconstruction of internally developed software
  • Inquire about the cost of coverage for lost income resulting from the loss of EDP equipment or software

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Ed Fox

Ed Fox

Ed Fox works closely with partnership stakeholders and product leaders on business strategic planning, as Director of Technology. Ed leads the product and technology teams, directing operations while working with clients to ensure a successful development process and, when appropriate, integration with existing platforms. Ed’s specialty is aligning technology vision and strategy with product and business direction, and converting strategic plans into platforms that can grow in the market.