Electronic data liability endorsement

Added protection for data liability risks

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An electronic data liability endorsement is an add-on to a general liability (GL) or business owners policy (BOP) that protects your business from risks involving digital information like software, files, and customer info. It typically applies when you damage someone's hardware and cause data loss or corruption.

Progressive Commercial can help you find the right insurance to protect your business. Get started with a quote or connect with an agent to learn more.

Why electronic data liability coverage is important

An electronic data liability endorsement is important because it provides key financial protection for your business. It also fills an important coverage gap in many general liability and business owners policies.

This coverage can help if you accidentally damage a customer's computer, server, or storage device and their data is damaged or erased. It keeps you from paying out of pocket for recovery, reparations, and legal expenses.

Who needs an electronic data liability endorsement?

Businesses that work in or around customers' computers, servers, point of sale systems, or storage devices should consider electronic data liability coverage. Professions and industries that can benefit include:

IT support and repair services: Providers who handle clients' hardware for maintenance or troubleshooting.
Contractors and trades: Electricians, HVAC technicians, construction managers, and other tradespeople who could accidentally damage wiring, equipment, or connected devices.
Retailers and service providers: Retailers that set up or install electronic equipment for others.
Delivery and moving services: Delivery businesses that transport computers, monitors, or servers for customers.
Janitorial services: Janitorial companies and cleaning crews that work around computers and other equipment in offices or retail spaces.

What does an electronic data liability endorsement cover?

This endorsement is designed to address third-party liability when electronic data is lost or corrupted in situations like:

Data loss from damaged equipment: When files become inaccessible because a device was accidentally dropped, broken, or otherwise physically harmed.
Data corruption tied to hardware failure: Coverage applies when physical damage leads to corrupted or unusable files.
Loss of use of electronic data: When a client can't access data because you accidentally damaged their device.

If you cause one of these incidents, this endorsement can help with the following:

Data restoration and recovery: Pays for the services an IT professional provides to restore or recreate lost data and software.
Legal or forensics expenses: Covers investigation services and costs associated with potential lawsuits.
Business interruption for the client: Helps replace another company's lost income if it has to shut down operations temporarily due to a data breach.

What isn't covered by an electronic data liability endorsement?

It's important to know what an electronic data liability endorsement doesn't cover. Common exclusions include:

Physical property damage: Damage to computers, servers, and other hardware can be covered by property damage coverage on your GL or BOP.
Cyber attacks, data theft, hacking, or malware events: These fall under cyber insurance. You can get this coverage as a standalone policy or as part of some BOPs.
Future income loss: While this endorsement covers business interruption caused by a data incident, it probably won't cover the revenue a third party might have earned after operations are restored.
Reputational harm: Losses related to brand damage or diminished customer trust won't be reimbursed under electronic data liability coverage.

An example of how electronic data liability works

You run an accounting firm, and an employee accidentally knocks over a client's external hard drive during a meeting. The device breaks, wiping out your clients' tax documents. Electronic data liability can help pay for an IT specialist to recover lost files and rebuild the database.

How to get electronic data liability insurance coverage

You can usually get electronic data liability coverage by adding it to your BOP or GL policy. Most policies provide coverage on a claims-made basis, which means it only applies to claims that are made during the policy period.

Start a quote online or speak with one of our insurance experts to see how this endorsement works with your other coverages and if you may need additional cyber insurance.

Frequently asked questions about electronic data liability endorsements

Is electronic data liability coverage the same as cyber insurance?

Not quite. There are similarities, but electronic data liability focuses on third-party data loss related to hardware damage, like a computer or server. Cyber insurance provides broader protections for cyber attacks and data breaches, as well as first-party coverage for your company.

Does this endorsement cover cloud-based data loss?

It can. Coverage depends on your policy, but it may include data stored on third-party cloud platforms if the data becomes inaccessible due to a covered event, like accidentally cutting the wrong wire during an electrical update.

Can this endorsement help with regulatory compliance?

Not directly. Electronic data liability doesn't guarantee compliance, but it may cover costs that result in legal or regulatory action, such as a forensic investigation or legal defense. For broader protection, consider a cyber policy or a BOP with cyber coverage.

Explore information about cyber insurance coverage and review our BOP coverage guide to see how these policies could help your business.

Is electronic data liability coverage available for mobile devices or remote employees?

Yes, it's possible for coverage to extend to incidents involving mobile devices or remote setups if you're responsible for property damage that leads to data loss. Review your policy for more details or contact an in-house agent with questions.

What's the difference between first-party and third-party coverage?

First-party coverage protects your business's own data and operations. Third-party coverage applies when a client's data is compromised and they file a claim against your business. An electronic data liability endorsement protects against third-party claims.