In response to the social distancing introduced to combat the coronavirus pandemic, many companies are implementing voluntary or mandatory work-from-home policies. Some of the biggest challenges for businesses include their employees struggling with loneliness, managing time & productivity, and communication among staff members.
However, another challenge is the additional stress on business computer systems and data security in light of decentralized access to software, files, and other data. The unpleasant reality is that in the middle of a global pandemic many businesses will face a “technology accident”, which may include physical system and electronic data damage, electronic circuitry impairment, virus, or even theft.
The good news is that many businesses already have insurance coverage for such loss.
What insurance applies when your computer systems fail or your data is damaged or lost?
Many business insurance policies contain coverage for damaged physical property including computer systems. In fact, these policies often include coverage not only for the property-related damages stemming from computer system failure but also the lost business revenue as a result of reduced or limited operational capacity caused by the technology failures or loss. Some policies (or riders) include coverage for the costs to reproduce or replace lost ‘electronic data’ when the destruction or corruption is caused by a peril insured against including loss by theft.
How do I know if my business has coverage for a technology accident?
Insurance policies are contracts and their terms are construed in accordance with the general principles applicable to all contracts. Under Virginia law, if the policy terms are unclear or seemingly in conflict, or the policy language purports to exclude certain events from coverage, such terms are generally construed against the insurer and in favor of the insured.
What if the insurance company denies the claim?
Under Virginia law, insurance contracts include an implied covenant of good faith, requiring an insurer to make a fair settlement of claims when liability is reasonably clear. In instances where the insurance company fails to do so it may be necessary to sue the insurance company for breach of contract and for its bad faith failure to pay claim.
Bad faith claims arise when an insurer refuses to pay a claim without a reasonable basis or even if the insurer has a reasonable basis for denial, failing to properly investigate the claim in a timely manner. In these situations, Va. Code § 38.2-209 allows an insured to recover its costs and reasonable attorney’s fees if the court determines that the insurance company was not acting in good faith.
Consult with an experienced business and insurance dispute attorney.
Whether you have already experienced a “technology accident” or you just want to have your business’ insurance policy reviewed the business and insurance dispute attorneys at Surovell Isaacs & Levy can help! Please reach out to one of our business attorneys by calling us at 703-988-6400 or email Stephen Pierce at SPierce@SurovellFirm.com.
Posted in: Business Law