Electronic Equipment Insurance: Coverage, Claim & Exclusions

Updated: 01-10-2019 11:46:14 AM

Almost all businesses and organisations today need electronic equipment for functioning. And any problem with the equipment can hamper the work, leading to financial loss. To overcome the monetary loss and get coverage for related risks, one can opt for electronic equipment insurance (EEI).

What is Electronic Equipment Insurance?

These days there is hardly a business which does not use data, electronic equipment and analytics. If any of these items are destroyed, there can be a major loss, resulting in both financial drainage as well as elevation in stress level. Electronic Equipment Insurance (EEI) offers comprehensive coverage to loss of electronic goods and helps the policyholder save on unavoidable costs.

Types of Electronic Equipment Insurance

The electronic equipment insurance offers coverage under three sections in order to meet various requirements of people. The three categories are:

• All Risks: The policy covers both fire and manual perils. While fire, storms and landslides are some examples under natural calamities; damage caused by terrorism, riots and strikes are manual perils
• External Data Media: This covers the expenses caused due to loss of data on external media devices like cassettes, discs and magnetic drives
• Increased Cost of Working (ICOW): This is the cover for substituted data processing unit. When the insured equipment gets lost or damaged and an alternative tool or additional workers are used to carry on the work, the expenses are covered by electronic equipment insurance

What Electronic Equipment Insurance Covers?

Electronic equipment insurance is a must for people who deal with electronic equipment. A flexible insurance policy, the plan covers most of the damage or loss caused to the equipment due to the following causes:

• Coverage on damaged equipment: Replacement expenses of the insured property, like freight, erection cost and customs duty
• Coverage on damaged data media: Expenses involved in restoring the external data media; lost information, damaged or lost data media
• Cost of working: Increase in manual work due to loss or damage of electronic equipment, the expenses involved in employing more workers is included in the electronic equipment insurance The personal and transportation costs borne by the company for this reason is also covered
• Software damage: This kind of insurance policy also covers loss or damage to software which was the effect of hardware issue

How Electronic Equipment Insurance Functions?

• The insurance seeker fills up a proposal with the details of the equipment
• The company representative visits the site and checks the equipment
• Depending on the condition of the machinery and expected insurance amount, premium is decided based on which sum insured is calculated. This sum insured depends on the equipment to be insured
• For equipment, new replacement costs and the software cost are insured
• For external data device, replacement cost of empty data media and cost of reproducing the lost data are covered
• For substituted employment of additional workers, personal expenses and the transportation costs come under the sum insured
• The policy holder submits all required documents
• A representative from the insurance company investigates the issue
• If the claim is genuine, the claim amount is paid in the beneficiary account
• If the claim is found to be false or out of the scope of the policy, it is rejected
• If the insured is not fine with the solution or claim amount offered, he/ she can raise a dispute in the court of law

Eligibility Criteria 

You can purchase electronic equipment insurance if you are:

• Owner or owners of electronic equipment
• Organisation leasing electronic equipment
• Bankers or financiers who bear the purchase cost of the equipment

The plan is suitable for all electronic equipment, such as:

• Audio visual equipment
• Electronic control panels
• Computer or allied peripherals
• Auxiliary equipment like UPS, voltage stabiliser
• Telecommunications and navigation equipment
• Electronic equipment used for research and material testing purpose
• Medical or biomedical equipment like X-ray machine, path lab, ultrasound devices, MRI and CAT scan machines

Claim Process

• The insurance company has to be immediately intimated about the nature and extent of loss or damage
• A duly filled up claim settlement form needs to be submitted
• Furnish all the other requirement documents and information as needed by the company
• A company representative will visit the site and examine the risk as mentioned in the claim form
• If the claim falls under the conditions mentioned in the policy, the amount is paid to the beneficiary
• If there is any dispute or difference regarding the amount paid as per the policy, the insured and the insurer can settle the same in the court of law

Documents Required for Claim Process

To get the claim amount for sudden and unforeseen physical or software damage or loss of electronic equipment, below mentioned documents need to be submitted:

• Duly filled in claim settlement form
• Photocopy of the insurance policy
• Details of the insured electronic equipment
• Copy of FIR, in case of theft of the insured electronic device
• Photocopy of the Preventative Maintenance Agreement of the equipment
• Bills and documents, if any repair work is done on the damaged equipment

Time Taken to Settle Claims

The electronic equipment insurance claim amount is usually settled within 30 days of receiving the documents supporting claim request.

Exclusions

The electronic equipment insurance offers various types of coverage; however, there are certain issues which do not come under the insurance, also called exclusions. Some of these points for which you can’t make claims are:

• Normal wear and tear which takes place with time
• Damage caused due to overhauling and modification of data or equipment
• Manual disruptions like nuclear explosions and wars
• Intentional negligence of the policy holder during use and maintenance of the equipment
• Aesthetic defects which already existed in the insured equipment
• Consequential loss which takes place on the equipment
• Damage done by pressure waves of aircraft or other aerial devices
• Expenses for loss of data will not be covered if there was no backup system for the same

Companies offering Electronic Equipment Insurance in India

Today, there is an increase in awareness about purchasing insurance for covering the risks that can lead to financial loss. And electronic equipment insurance is one of them. Some  of the companies providing this insurance in India are:

• SBI General
• ICICI Lombard
• Oriental Insurance Company Limited
• United India Insurance
• Reliance General

Important Aspects

It is best to understand all the aspects related to electronic equipment insurance before purchasing one. Let us understand some points to be kept in mind while applying for electronic equipment insurance:

• The beneficiary has to inform the insurance company in writing about any change or movement of the insured equipment
• It is important to mention the identification mark/serial no. of the insured electronic equipment
• The equipment should be under a Preventative Maintenance Agreement to get the claim amount
• Need to preserve the affected equipment parts so that it can be shown during investigation
• Police needs to be informed immediately, in case of theft of the electronic equipment
• If the claim is found to be false, the policy is completely rejected and new policy cannot be commenced till the next 3 months

Advantages of Buying Electronic Equipment Insurance

Some of the benefits of purchasing electronic equipment insurance (EEI) are:

• The complete cost of loss/damage to data or electronic equipment are covered, irrespective of the depreciation cost of the equipment
• The policy can also bear the additional costs of overtime, night work and double pays on public holidays
• If the policy holder cannot replace the electronic equipment due to unavoidable circumstances, the insurance company can still pay the claim on Indemnity Basis

FAQs

Q1. What does the term electronic equipment mean?

This term refers to all systems which require low voltage and power to operate. The equipment generally do not make any sound. Few examples of electronic equipment are complete computer systems, including monitor, CPU, keyboards, printers, stabilisers and UPS.

Q2. How is the premium calculated?

The premium amount depends on the market value of the insured equipment, nature and use of the tools. The maintenance agreement of the equipment is also considered while calculating the premium.

Q4. What is the policy period of electronic equipment insurance?

The policy is renewed on an annual basis.

Q5. Can electronic equipment insurance policy be extended?

Yes, the policy can be extended to cover 3^rd party liabilities, surrounding property of the policy holder, extra custom duties, express freight, escalation and air freight.

Q6. Within how many days the insurance company has to be intimated about the loss/ damage?

This time period is of 14 days.

Q7. Can policy holder terminate the policy?

Yes, electronic equipment insurance can be terminated at the request of the insured.