Insurance For Your Data?

Most of us purchase insurance policies to protect our assets from losses due to fire, theft or disaster. If you own a home, then you probably have a homeowners policy that covers your home and contents. If you are a small business owner, then you probably have a similar policy to cover your office equipment, furniture and other fixed assets. You should read your policy carefully and understand the coverage limits on computer equipment. You may find that you need to increase your coverage for electronics and computer equipment. Although you may have purchased a policy with increased coverage from a reputable firm, your most valuable asset may not be covered.

Even if your insurance agent assisted you in selecting the appropriate policies and coverage, chances are that there was no mention of protecting your data assets. Most insurance companies don’t offer policies that cover the loss of data. And for good reason, the financial loss can be staggering and it is almost impossible to determine a fair value for data. The data on your computers can be much more valuable than the hardware itself. The loss is not limited to the value of the data itself, technical support and lost productivity are also costly side effects of the actual data loss.

Consider this incident: A sales representative for a chemical products company has a home office that he often uses to make phone calls and follow up on leads. Unknown to anyone, a power cord to a laser printer was slightly damaged by a vacuum cleaner in such a way that strands of the conductors were able to make contact with each other. Eventually these wires sparked and ignited a stack of paper that was on the floor next to the desk. Fortunately, he was home at the time and smelled the smoke before the fire got out of hand. He quickly extinguished the fire before major damage was done. However, the computer which sat on the floor under the desk was severely damaged and the bottom drawer on the left side of the desk was charred. The insurance adjuster promptly visited the next day and generously allowed $1000 to replace the computer, (which was 2 years old and probably worth only $300), $650 to replace the entire desk, and another $1800 for carpet and smoke damage. The problem is that the computer contained over 1200 MP3 files, 3000 digital photos, dozens of spreadsheets and documents, and hundreds of contacts (including prospects). Most of the files were backed up a few weeks earlier, but the CDs that contained the backup data were melted in the bottom left desk drawer.

In some cases, some kind of insurance policy to protect against data loss may be appropriate, especially if there is a risk of liability if data is lost. In most cases, a financial settlement to replace lost data is not adequate. How can money replace 4 years worth of digital photos? How can you determine how much productivity you will lose while you track down contact information that you need to replace over the next few months? The answer is in the way you backup your data.

While most of us know that our data needs to be backed-up, most people fail to make adequate backups. The reasons are many, but the fact is that any reliance on manual procedures has a high probability of failing. Any backup process that leaves your backup data in the same house or building as your computer cannot be considered adequate protection. Online backup services are the closest to a sure-thing for protecting your files from fire, theft, disaster, or human error. There are many providers, and a few of them are priced very reasonably. Be weary of the very cheap and free services, they may not be around for the long term, and your data may not be protected. There is no excuse for not having good backups, the services are readily available and they are very simple to setup. Once configured, an online backup service will consistently backup your data with no manual effort.

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