Insurance News

Protect Business from Loss of Data & Programs
by Richard Ollis

Virtually any business today has increasing risks associated with a very common business tool -- computers. They are becoming indispensable in today’s business environment. E-mail, telecommunication, data bases, the internet and other software programs can grind your business to a halt if damaged, destroyed or disabled. Many businesses don’t have a viable plan in place to handle even the smallest disruption. Even most copiers, faxes, printers, scanners and computerized production machinery can have a major impact if they are down for any period of time.

Developing a plan to get your business back up and running quickly can be critical to client retention and profitability. A good place to start is evaluating your hardware and how it could be replaced. One thing to consider is will existing software run on new hardware. It’s one thing to get new equipment quickly. It’s another to make it work.

Probably the largest exposure you have is your software and your data. Loss of programs and data could disrupt or even destroy your business completely. There are several key steps that all businesses need to take:

• Back-up your system regularly and take the back-up information off-premise. Don’t leave your back-up on site where it might be destroyed along with your original. Consider investing in an off-site back-up service. Several companies now offer a service of performing back-up, storing it off-premise and helping you restore it after a disruption. As mentioned earlier, try to make sure the back-up will reload on new hardware.
• Invest in a good anti-virus program and keep it updated. A virus can bring your whole system to a halt. Some programs also offer spam blocking which can cut down on unwanted e-mails.
• Limit internet access and have a written policy on e-mail etiquette. These policies may limit your liability for both viruses and lawsuits.
• Review and understand you maintenance contract with all software vendors. Some contracts replace damaged programs and may even provide disaster recovery services.
• Consider entering into an agreement (warrantee) with a provider that will guarantee the maximum time it will take to replace hardware, particularly servers. A day or two can make a huge difference in productivity and profitability.

Another prudent step to protect your systems is purchasing the appropriate insurance coverages. It’s important that computer hardware, software and extra expenses/loss of income be covered under a computer or inland marine policy. Don’t just cover the equipment and software under a standard property or contents policy which may not provide broader computer coverage.

A specialized computer policy will typically cover mechanical breakdown and electrical surges that damage equipment and the extra expense/loss of income associated with those types of losses. In addition, some specialized policies have broader coverages that may include replacement of both hardware and software, with new equipment and programs (replacement cost).

Software or media coverage is normally needed for programs that you don’t have a contract with your provider to replace. Be sure to include all other programs and the value associated with replacing them if they’re destroyed.

Probably the most overlooked area of coverage needed is the loss of income or extra expense associated with a computer insurance loss. Our company recently had some equipment damaged. For us, the time associated with being down was more costly that replacing the equipment. We expedited the shipment of equipment and had to reload data. Time can be a critical part of recovery. Make sure you have enough coverage to help pay for loss of income and extra expenses associated with a loss.

With so much data, work and productivity riding on your computer systems running effectively, it’s critical to have a plan and the right structure of insurance coverage. Take the time to develop and implement a disaster recovery plan. With the help of your insurance agent, place the proper insurance coverage in effect. These two strategies will serve you well if your business suffers a loss.

(Richard Ollis is president of Ollis and Company, an employee-owned independent insurance agency.)
The above article appeared in the June 26-July 2, 2006, edition of Springfield Business Journal