It’s not uncommon that an employee accidentally puts a customer’s electronic data in jeopardy. The question is, will the customer sue for the cost of reconstructing the data, and will it be covered by a general liability policy? Unfortunately, the answer is probably no. However, it is possible to buy back some coverage due to data-related claims through an endorsement. 

Where can I find electronic data in my general liability policy? 

Most general liability policies include a section highlighting the exclusion of electronic data. It falls under Bodily Injury and Property Damage Liability. In a nutshell, it rules out coverage for damages that arise from the loss of data (and loss of use of data), damage or corruption to data, and inability to access or change data. The exclusion provides an in-depth meaning of what electronic data is so you have a better understanding of why it’s excluded. 

I see a section in my general liability policy for tangible and intangible property. What is this? 

Tangible property is anything that can be touched or felt. Examples of this might be a laptop, monitor, or phone. Intangible property is property without a physical form, like copyright or trademark. Under a general liability policy, damage to electronic data is not considered property damage, or tangible damage. 

What is an example of an excluded claim? 

The electronic data exclusion rules out coverage for most claims or lawsuits that happen due to loss or damage to data. Here is an example of an excluded claim: 

Let’s say a pest control company called Bugs Be Gone has been hired by a property management company called Uphill. They are asked to service an office building that Uphill owns. While fighting off pests in the brush surrounding the building, a Bugs Be Gone employee accidentally cuts a wire with one of his tools, causing the building’s Internet to go out for 2-3 days. Because the Internet is out, tenants in the building are unable to perform work activities. Uphill may then sue Bugs Be Gone for the money that was lost during the outage.

Does the electronic data exclusion provide any exceptions? 

Yes there is one exception: bodily injury. If you lose, damage, or alter someone else’s data, but the incident results in a third party injury, the injury should be covered. So let’s say a plumbing company visits a housing complex’s front office to fix the piping. While fixing the piping, the plumbing company forgets to mention that scaling hot water could come out of the bathroom sink if the faucet is turned on. The front office worker goes to wash his hands, and develops 2nd degree burns due to the water temperature. If the front office worker sues the plumbing company for bodily injury, the claim should be covered by the plumber contractor’s general liability policy.

If you’re worried about the safety of your business’s electronic data, you’ve come to the right place. Thinline Technologies helps small to mid-sized businesses protect data, and can help you in ensuring data does not get lost. Visit our services page for more info, and contact us today.