Disaster. What does that word conjure up for you? Its exact definition is a “serious disruption to the functioning of a community that exceeds its capacity to cope using its own resources.” You more than likely think about natural disasters and man-made hazards that damage buildings and the landscape.
But what’s inside that damaged building? All of your computer and telephony equipment. All of the stuff that keeps your organization going on a day-to-day basis. It’s likely you have neither the skills nor the money to repair or replace all of that. This is called an IT disaster.
IT disasters don’t just result from the things that normally come to mind when you think of a disaster. They can come from many sources, and as is their nature, are usually completely unpredictable.
How will you cover the costs to get back up and running? Businesses lose $26.5 billion each year due to IT disasters. You could lose your entire business. Fortunately, help is available. It’s called insurance, and it will help you get back on your feet if the worst happens. Let’s take a look at the disasters that might strike your information technology, and how insurance can help.
IT Disasters and Their Causes
IT Disasters rarely happen in ways you would expect. Many scenarios of IT disasters are prime examples of Murphy’s Law– if something can go wrong it will, and in the worst possible way. Let’s take a look at some of the biggest threats:
- Water. These are typically floods and water leaks.
- Power outages. These can be caused by anything from a short circuit, lightning, central power outages, or a power surge.
- Malfunctions in the cooling system. This can be a source of water leakage, but can also cause temperatures to rise beyond acceptable levels.
- Localized fires. These usually happen through overheating, short circuits, or faulty electronic components.
- Human error. Mistakes happen, and some of those can be costly. The possibilities for human error are virtually endless.
- Software failures. Again, mistakes happen, and programmers are not immune.
- Communication failures, either internal or external.
Anything can happen at any time. This is why you need insurance to be sure you successfully weather any disaster and don’t lose your business. The costs depend on a number of factors, but can be as low as $27 a month.
Electronic Data Processing Insurance
It’s an antiquated name for a product that covers the equipment needed in our modern digital world, but electronic data processing insurance (EDP) is what will cover your equipment from damage after an IT disaster.
Who needs it? Anyone who works with any electronic media, data, or hardware during normal business operations.
EDP insurance is an add-on to your basic commercial property insurance policy. This policy add-on, or rider, works to fill the gaps in coverage provided by other policies. Sometimes this type of policy can be written separately from any other policy, so ask your insurance agent.
An EDP policy covers electronic equipment in three main categories:
- Data. This includes software, applications, and other valuable forms of data you use in business operations. Also included are proprietary software and operating systems.
- Media. If you still store data on tapes or discs, you’ll be covered.
- Hardware. This includes any electronic equipment, including laptops, workstations, computers, servers, modems, routers, etc. Some policies also include printers, copiers, scanners, telecommunications systems, and cooling systems used solely for hardware.
EDP insurance covers the replacement cost or the repair costs of these items if they are damaged in an IT disaster.
What IT Disasters are Covered?
The list of what type of IT disasters are covered by EDP insurance is pretty extensive, and covered perils usually include:
- Changes in temperature and humidity
- Computer viruses–this coverage may have a sub-limit
- Third-party hacking
- Employee hacking
- Electrical disturbances such as short circuits and arcing
- Mechanical breakdown
- Power surges, except when caused by a utility. For an additional premium, you can get coverage for power failures
- Business income and extra expenses
A number of factors go into determining the value of damaged goods. Your insurance provider will calculate this based on factors such as:
- Replacement cost
- Actual cash value
- Cost of functional replacement
Functional replacement cost is the cost to replace an item with its functional equivalent. When property undergoes frequent technological changes, this method is used.
As an example, if your five-year-old computer is damaged by a power surge and cannot be repaired, you likely can’t replace it with an identical model. Insurance pays the cost of a new and different model that performs in a similar way.
When discussing insurance for IT disasters with your agent, find out if the following coverages are already included in your policy or if they are add-ons. You may or may not need this coverage, depending on your circumstances.
• New equipment
• Equipment at a newly acquired senior living community
• Equipment in transit
• Interruptions from utilities
• Offsite equipment use–this is especially important if any of your staff use company-issued laptops or mobile devices when not on-premises.
Protect the Tools That Keep Your Senior Living Community Running
Insurance is important for both business stability and peace of mind. So is having the right equipment and a vendor that can get you back up and running quickly after an IT disaster.
At RSN Technologies, we’ve been helping senior living communities thrive through specialized IT services that include IT management, enterprise-grade voice and wireless, and technology project management.
When it comes to IT disasters, we’ve probably seen them all during our more than 20 years serving senior living communities, and only senior living communities. When IT disaster strikes, we offer speedy service to get you back up and running fast. Reach out today to learn more about how we can help you plan for IT disasters.