Records Advisory: Insurance Coverage for Records and Data

September 2016

Some property insurance policies provide limited coverage for lost or damaged records. In order to more fully protect your organization, however, you’ll need to add an endorsement or rider to your policy for an extra cost or in some cases purchase a separate policy.

The State Archives offers the following information as background to assist you in determining whether and how to obtain insurance coverage for your paper and electronic records. More detailed information is available from your insurance professional.

Many property insurance policies offer an endorsement called valuable papers coverage. Keep in mind that the endorsement name is quite literal: in most cases it will only cover traditional paper records and not electronic data. The costs covered generally include:

• document recovery, including freeze drying records, decontamination, or other steps needed to restore the original paper document for use;

• reformatting badly damaged paper records through microfilming or digitization;

• recreating fully destroyed records using information from other records or data sources. The costs here may include hiring temporary staff to search other sources and rekey information.

You may also purchase a separate endorsement that may cover you for data loss or you may need to purchase a separate data policy. These policies protect your electronic data not only from traditional losses such as flood or fire but also from viruses, hard drive crashes, or sabotage. If sensitive data is stolen and made public, your organization could suffer litigation from injured parties. Some policies may also provide liability coverage in cases of such data breaches.

Generally a data loss policy will not cover:

• loss of software programs

• loss due to improper storage, design fault or electronic supply other than a power surge

• the normal wear and tear of an electronic device

As with any insurance coverage, the insured is obligated to certain measures to protect itself from loss. The same is true for records and data coverage. Most policies will require paper records to be properly stored in a safe secure area and in some cases vital records must be stored in a fire resistant safe or vault.

For electronic records the insurer will likely expect you to perform such tasks as: regularly backup data, have offsite storage of backups, virus protection, and similar methods to protect against loss.