What Do Contractors Need to Know?
As a contractor, you’re likely familiar with how General Liability (GL) insurance protects your business in case of bodily injury or property damage caused by your operations. However, one important part of your GL policy that might be overlooked: is exclusions. These exclusions could leave certain types of property, including electronic data, unprotected.
Why Does This Matters to Contractors?
When you think about General Liability insurance, it’s usually tangible property or bodily injury at a job site. But it often doesn’t cover non-tangible property, such as electronic data, which is often excluded from many policies.
Electronic data refers to any information stored or used electronically—like computer files, software, and databases. If your work causes damage to physical property (like equipment or buildings), but that damage also affects the data stored on electronic devices, it’s not covered by a standard GL policy or even most Umbrella policies.
What Does Electronic Data Include?
Electronic data includes any information or programs stored, used, or transmitted via electronic devices such as computers, software applications, hard drives, CDs, DVDs, servers, or any similar equipment. For your business, this could be files, emails, records or client information stored digitally but not printed on paper.
Real-Life Scenarios:
Here are two situations where electronic data can become a concern for contractors:
1. Accidental Damage at a Hospital
Imagine your crew is renovating a hospital, and during the work, they accidentally damage a sprinkler system. The water causes damage not only to physical property but also to the hospital’s computer server room, leading to the loss of all their stored data. The physical equipment might be covered under your General Liability policy, but the data loss won’t be. The hospital would have to recover or rebuild the data themselves, at their own cost.
2. Electrical Surge at a Commercial Client
Let’s say you’re an electrical contractor working for a large commercial client. During the project, you inadvertently cause a power surge that damages their computer systems and erases their data. Your standard General Liability policy will cover the hardware but the lost data recovery would not be included.
How Can Contractors Protect Themselves?
To protect against these risks, contractors should add an ISO endorsement for Electronic Data Liability to their policy. This endorsement covers data loss or damage caused by physical damage to tangible property. It can protect you if data becomes corrupted or inaccessible due to an accident on-site.
Make sure this coverage has an appropriate sub-limit based on your business needs. It’s an important addition to your General Liability coverage, but it’s often overlooked, especially by brokers who may not specialize in construction.
Isn’t Cyber Liability Coverage Enough?
Cyber Liability insurance helps protect against digital breaches but generally doesn’t cover property damage that affects data. Some brokers might confuse this with Electronic Data Liability, but they’re different. Cyber Liability covers breaches, while Electronic Data Liability covers property damage that impacts data.
Are You Covered?
Now’s the time to review your General Liability policy to see if it includes Electronic Data Liability coverage. If it’s missing, request a full review of your insurance and ask for this endorsement to be added.
At McConkey Insurance & Benefits, our Construction specialists can conduct a comprehensive coverage analysis to identify gaps and ensure your business is fully protected. We’ll help you understand your policy and add necessary coverage—like Electronic Data Liability—to better safeguard your operations.
