What Is Electronic Equipment Insurance?
Electronic equipment insurance (EEI) is a property insurance for physical loss of or damage to electronic machines, equipment and data-processing systems listed in the policy schedule, caused by sudden and unforeseen events. Under the Electronic Equipment Insurance General Conditions published by SEDDK, the cover relates to damage occurring while the equipment is operating normally after its trial period, or during cleaning, maintenance, overhaul and relocation at the same workplace, or while idle.
The equipment is listed in the schedule forming an integral part of the policy, with its type, number, year of manufacture, nature and insured value. The two sub-sections of this page, fixed equipment and portable equipment, are separated by this schedule and by the relationship to the insured premises.
Causes of Loss Under the General Conditions
The General Conditions cover the repair costs and replacement values of physical loss or damage arising from any sudden and unforeseen cause that was not known in advance. The causes listed as examples include:
- Negligence, fault, error, carelessness or sabotage of operating personnel or third parties
- Theft or attempted theft at the locations where the insured items are kept
- Faulty design and materials
- Effects of short circuit, high voltage and induced current
- Fire, lightning, any kind of explosion and the extinguishing, demolition and salvage operations resulting from them
- Scorching, blackening, smoke and soot
- Natural events such as storm, flood, landslide and subsidence (earthquake excluded)
- Effects of water and humidity and the resulting corrosion damage
- Other sudden and unforeseen causes not otherwise excluded
This list reflects the examples in the General Conditions; every cause need not apply identically in a given policy. See the sections below for special conditions and exclusions.
Fixed Electronic Equipment
Fixed equipment is installed and used at the insured premises stated in the policy. The General Conditions bring damage to such equipment within the cover while it operates normally, during cleaning, maintenance, overhaul and relocation, or while idle. Typical examples include server and data-centre equipment, medical imaging and laboratory devices, control and measurement systems, communication and broadcast systems, and security and camera systems; each item must appear in the policy schedule.
- Sum insured: Under the General Conditions it should equal the new replacement value of the equipment, including transport, installation, customs, duties and charges where applicable.
- Maintenance duty: The insured must keep the equipment in normal maintained and working condition, comply with the manufacturer's instructions for use, checks and maintenance, and avoid overloading.
- Trial period: The cover is defined for normal operation after the trial period; installation and commissioning stages are dealt with under erection insurances.
Portable Equipment and Use Outside the Insured Premises
Portable equipment (for example laptops, tablets, field measurement and test devices, portable medical devices) must be assessed separately for its link to the insured premises. The General Conditions set a clear limit:
- Use and shipment outside the premises: Loss or damage to mobile and portable electronic devices while used or shipped outside the insured premises stated in the policy is excluded unless otherwise agreed (General Conditions art. 2(b)).
- Theft: The theft cause listed in the General Conditions is tied to theft at the locations where the insured items are kept; an express provision should be sought for theft outside the premises (this is an interpretation based on the wording of the General Conditions).
- Transport costs: Costs of transport by express means other than the usual means that ensure the earliest transport required by the loss, and overtime wages, are excluded unless otherwise agreed.
When insuring portable equipment, the following should therefore be clarified: where the equipment will be used (office, field, vehicle, abroad), how the insured premises are defined in the policy, whether the policy contains an express extension for use outside the premises, and whether risk in transit will be handled under cargo insurance. Whether such extensions are offered depends on the insurer.
Scroll the table horizontally to see all columns.
| Fixed equipment | Portable equipment | |
|---|---|---|
| Place of use | Insured premises stated in the policy | May be inside or outside the insured premises |
| Position under the General Conditions | Normal operation, maintenance and relocation at the premises are within the cover framework | Use and shipment outside the premises stated in the policy are excluded unless otherwise agreed (art. 2(b)) |
| Theft | Theft at the locations where insured items are kept is a listed cause | An express provision is needed for theft outside the premises |
| Points to clarify | Equipment schedule, new replacement value, maintenance contracts | Places of use, method of transport, extension outside the premises, relationship with cargo insurance |
Exclusions and Policy Limits
The General Conditions contain two groups of exclusions. The first applies unless otherwise agreed and may be widened by special condition; the second is excluded outright.
Excluded unless otherwise agreed (art. 2)
- Costs of transport by express means, overtime and holiday wages and surcharges
- Loss or damage to mobile and portable devices while used or shipped outside the insured premises
- Loss or damage resulting from earthquake
- Loss or damage caused by strike, lockout, riot and civil commotion and the military and police action they require
- Loss or damage resulting from physical damage to external data media such as magnetic disks, tapes and cards, including information recorded in electronic data-processing systems
- Increased working and operating costs arising from using an alternative item in place of the damaged one
- Loss or damage to valves and tubes
- Loss resulting from acts of terrorism under Law No. 3713 (biological or chemical contamination is separately excluded)
Excluded (art. 3)
- War, invasion, civil war, revolution, rebellion and insurrection
- Nuclear fuel and radioactivity
- Acts of public authorities with respect to the insured items
- Any loss of profit and financial liability, whatever the cause
- Wear and tear from normal operation and use, decay, rust, corrosion, erosion, oxidation and gradual deterioration
- Loss or damage for which the manufacturer or seller is liable by law or contract
- Loss from existing defects known to the insured at inception
- Loss arising from using damaged equipment before the damage is repaired
- Adjustment, repair and maintenance costs unrelated to an insured loss
- Loss of replaceable parts such as fuses, gaskets and belts and materials such as oils that are customarily renewed at set intervals, through use (damage to other insured items caused by these parts is covered)
- Cosmetic defects such as scratches on painted, polished or enamelled outer surfaces (damage to other insured items caused by these defects is covered)
- Wilful act and gross negligence of the insured or the responsible person acting in its place
- Biological and/or chemical contamination or poisoning resulting from acts of terrorism
Sum Insured, Loss Settlement and Limitation Period
- Sum insured: It should equal the new replacement value of the equipment (including transport, installation, customs, duties and charges where applicable). If the new replacement value at the time of loss exceeds the sum insured, the insured bears the proportion of the loss corresponding to the difference. A shortfall between sum insured and insurable value leads to proportionate settlement.
- Partial damage: Settlement covers the new price of replaced spare parts, labour, normal transport, installation, customs, duties and charges. No deduction is made for fitting a new part in place of an old one; salvage value is deducted.
- Total loss: Depreciation and salvage are deducted from the new value at the time of loss. The equipment is treated as a total loss if repair costs equal or exceed that amount.
- Deductible and limit: The deductible stated in the policy applies to each loss; liability is in any case limited to the sum insured stated for the item. Additions and improvement costs related to the loss are excluded.
- Other insurance: If the same loss is covered by another policy, the principles of co-insurance apply.
- Limitation period: Claims arising from the insurance contract are time-barred after 2 years.
Duties of the Insured and Notification of Loss
- Care and maintenance: The insured shows due care for the safety of the equipment as if uninsured, and complies with the manufacturer's instructions, the rules of administrative authorities and technical limits. The insurer is entitled to inspect and check the equipment.
- Notification of loss: A loss must be notified to the insurer within 5 days at the latest; salvage and protection measures are taken and the damaged place or property is not altered except where necessary. In case of theft, the police are informed immediately.
- Repairs: Under the General Conditions repairs are not started before notification; there is an exception for minor repairs. If the insurer does not send its expert within 7 days of the notification, the insured may start repair of the damaged part.
- Change in risk: If the place or condition of the insured item stated in the policy is changed without the insurer's consent, this must be notified within 8 days at the latest.
Boundary Between Electronic Equipment Insurance and Other Policies
Electronic equipment may fall within the scope of more than one policy. Under the General Conditions the main boundaries are as follows:
Scroll the table horizontally to see all columns.
| Electronic equipment (EEI) | Subject and boundary | |
|---|---|---|
| Machinery breakdown | Electronic machines and data-processing systems | The Machinery Breakdown General Conditions deal with machinery and plant; fire and theft are excluded there but are listed causes in the EEI General Conditions (among natural events, earthquake is also excluded in EEI unless otherwise agreed) |
| Fire and property | Sudden damage to the equipment | Equipment may also appear as contents in a property policy. If the same loss is covered by more than one policy, the General Conditions apply co-insurance principles |
| Business interruption | Loss of profit is excluded | Under the General Conditions loss of profit and financial liability are excluded; loss of profit requires a separate business interruption policy |
| Cyber insurance | Physical damage to data media is excluded unless otherwise agreed | The General Conditions do not separately regulate cyber events; only physical damage to external data media is excluded unless otherwise agreed (art. 2(e)). A cyber policy is considered for cyber-related losses |
| Cargo | Shipment outside the premises is excluded unless otherwise agreed | If the policy has no express extension for shipment of portable equipment, cargo insurance is considered |
The table is a general framework; the final outcome for each row is determined by reading the relevant policies together. Related pages: Machinery Breakdown Insurance, Engineering Insurance, Business Interruption, Cyber Insurance.
Information Needed for a Quotation and Underwriting
- Equipment list: type, quantity, year of manufacture, model, nature and new replacement value
- Insured premises and the location of the equipment
- For portable equipment: places of use, methods of transport and any need for use outside the premises
- Maintenance and service contracts, manufacturer warranties and warranty periods
- Security, fire protection and environmental conditions and loss history
The information required may vary by insurer and type of equipment.
Frequently Asked Questions
What is electronic equipment insurance?
Which equipment can be insured?
Are portable devices such as laptops covered outside the insured premises?
Are theft, fire and water damage covered?
Are data loss and business interruption covered?
How is a loss settled?
When must a loss be reported?
Neolife's Role
Neolife Group can review the relevant information and policy wording, research suitable local insurance solutions, run a placement exercise and compare the quotations received. This does not mean any insurer's capacity, acceptance of cover, price or payment is promised; acceptance and terms remain with the insurer.