Electronic Equipment Insurance

Electronic equipment are an integral part of most of the organizations around the world. Every company uses in one way or the other, electronic equipment for data, analytics, communication, entertainment, security/surveillance, computer-controlled production plant & machinery, medical use etc. The importance is such that any breakdown suffered by an electronic equipment/s may greatly hamper the flow of normal work and affect the business.  

Availing an Electronic Equipment Insurance helps to get financial protection for repairing the electronic equipment.

Types of Electronic Equipment Insurance

Electronic equipment insurance comprises of three categories mentioned as follows.

Material Damage: The cover applies to any unforeseen and sudden physical loss or damage from any causes ( other than those specifically excluded ), in a manner necessitating repair or replacement. It’s virtually an “ All Risks “ basis and indemnifies the policy holder against any physical loss or damage due to perils viz., Fire, Riot , Strike, Theft, Burglary, Earthquake, Flood, Cyclone, Short Circuit, Impact Damages, Carelessness etc.

External Data Media: It indemnifies expenses incurred for restoring external data media including the cost of reproducing lost data or information. –  This is not popular now as policy holders are content with only physical loss or damage or repairs to the hardware.

Increased Cost Of Working (ICOW): It indemnifies the additional costs which the policy holder shall incur to ensure continued  data processing on substitute equipment

What Falls Under Electronic Equipment?

  • Office equipments viz., desktop computer, printer, fax etc.
  • Auxiliary equipment like Modem, UPS, Voltage Stabilizer, etc.
  • Audio-visual equipment.
  • CNC controlled machines.
  • Electronic equipment used for research and material testing reasons.
  • Medical or biomedical equipment like Path Lab, X-Ray, Ultrasound Devices, MRI & CAT Scan Machines.
  • Teleprinters, Telex, etc.
  • Word Processors, & Printing & Franking Machine.
  • Telecommunications & Navigation Equipment.

What’s covered

The insurance policy covers:

  • Damage to the equipment that entails repair or replacement expenses of the insured property including customs duty, freight, and erection cost.
  • Damage to the data media that entails expenses involved in restoration of the external data media; lost information; damaged or lost data media.
  • Sudden, unforeseen, and accidental loss or damage caused to the electronic equipment by fire, lighting, and explosion; or electrical and mechanical breakdown; or flood or water damage; or burglary or theft; or natural disasters like earthquakes, cyclones, storms, etc; or failure of air-conditioning equipment; or faulty negligence, operation, and carelessness.
  • Riots, strikes, and malicious damage.
  • Increase in manual work as a result of loss or damage to electronic equipment; and the expenses involved in employing more workers included in the insurance; and personal and transportation costs borne by the insured company for this reason.
  • Damage to the software due to the effect of hardware issue.
  • Damage caused as a result of entry of foreign body or dirt.
  • Damage or loss caused as a result of extraneous impact and collision.

What’s not covered

The insurance policy does not cover:

  • Loss of damage due to wilful act or wilful negligence of the policy holder.
  • Normal wear and tear which otherwise happens with passage of time.
  • Damages caused as a result of overhauling and modification of data or equipment.
  • Damages covered under the AMC.
  • Damage caused by pressure waves of an aircraft or other aerial devices.
  • Aesthetic defects that already existed in the insured equipment.
  • Any kind of manual disruptions like wars or nuclear explosions.
  • Any kind of expenses incurred due to data loss, where no backup system was used for the same.
  • Any kind of damage or loss to exchangeable tools and operating media.
  • Any kind of loss or damage for which the manufacturer or supplier is responsible by law or contract.
  • Any faults or defects existing at the time of commencement of insurance policy, which were known or ought to have been known by the insured company.
  • Any consequential loss that occurs on the equipment.
  • Any derangement not accompanied by damage which otherwise is covered by the insurance policy.

Who Is Eligible For The Insurance?

Those applying for the policy must be an:

  • Owner or owners of electronic equipment. Rented equipment should not be insured.
  • Organization leasing electronic equipment.
  • Bankers or financiers who have a lien on the equipment by way of hypothecation.

Claim Process

The Insured must:

  • Intimate the insurance company immediately about the nature and extent of loss or damage.
  • Submit a duly filled claim settlement form.
  • Submit all the requisite documents and information as sought by the insurance company.

Documents That Needs To Be Submitted

The following documents are considered by insurance company for reimbursement of claim:

  • Copy of the estimate for repairs.
  • Survey report.
  • Duly filled claim settlement form.
  • Details pertaining to the insured electronic equipment.
  • Photocopy of the insurance policy.
  • Photocopy of the Preventive Maintenance Agreement of the electronic equipment.
  • Copy of FIR, in case of a theft of the insured electronic equipment.
  • Bills and documents, if any, where repair works are done on the damaged electronic equipment.
  • Salvage value.

Amount of Sum Insured

The amount of sum insured under the policy must represent the new replacement value of the electronic equipment, including custom duties, and transportation and installation charges.