Getting To Know Electronic Equipment Insurance (EEI)

21 September 2022

In working on a project, there must be risks that can be detrimental to both the project owner, project implementer, and other parties with an interest in the completion of a project. General insurance specifically has a number of products aimed at providing protection against various risks that can affect the process of working and completing a project.

This type of general insurance is called engineering insurance. This insurance product provides comprehensive coverage for sudden and unexpected loss or damage to insured object at project site during coverage period. Scope of work covered by this engineering insurance ranges from project engineering (construction) and non-project or what is called operations.

One of protection benefits provided by engineering insurance is Electronic Equipment Insurance (EEI). As the name implies, this insurance product provides comprehensive coverage against loss or damage (physical loss or of damage) that occurs suddenly (sudden) or unexpectedly (unforeseen) on insured electronic equipment such as computer networks. In addition, other objects covered are communication equipment such as radar, satellite, and relay stations as well as medical and laboratory equipment such as x-ray, y-ray, and so on.

Parties who can become insured in EEI policy are of course those who have an insurable interest in the insured equipment, such as owner of equipment in question and tenant of equipment if rental contract for the equipment places lessee as party responsible for equipment. The bank or finance company can also become insured if object of coverage is in collateral or fiduciary status.

Risks that cause damage or loss that are covered in the EEI insurance policy are fire, including all necessary actions to deal with fires; lightning strike and explosion, short circuit, over voltage; looting and evil deeds/vandalism; any form of damage caused by water; operational errors (negligence, carelessness, incompetence of personnel); and cover of burglary/robbery expansion, natural disasters such as earthquakes and hurricanes.

Principle of EEI insurance is to provide coverage for costs needed to repair or return damaged electronic devices to their working condition as before the damage occurred. However, extent of cover is that all risks or all covers are covered because there are risks that are excluded from  list of risks.

Premium rate for EEI is set in per mile per year, while the premium is a comparison between the total sum insured stated in insurance policy overview and rate agreed upon by insurer and insured and stated in policy. Usually, EEI policies are issued with a cover period of 1 (one) year.

Policies used in this EEI insurance cover generally use EEI Munich Re with 3 (three) parts of cover, namely Material Damage Cover, External Data Media Cover, and Inserted Cost of Working Cover. Each of these three covers has special exclusions which are clearly stated in each policy.

In Material Damage Cover section, EEI policy covers loss or physical damage to the insured equipment that occurs suddenly (sudden) and unexpectedly (unforeseen) whatever cause as long as it is not a cause or thing that is expressly excluded in policy.

In External Data Media Cover section, EEI policy covers loss or damage to the insured external data media including the information stored in it, with a number of provisions stipulated in the policy.

Meanwhile, in Increased Cost Of Working Cover section, EEI policy covers additional costs incurred for use of replacement EDP equipment that is not covered in relevant EEI policy if material damage covered in Material Damage Cover section of this policy causes a total or partial disruption to the operation of the EDP equipment listed in the policy schedule.

In addition to having special exclusions, three sections of EEI insurance covers also have general exclusions, namely for loss or damage that is directly or indirectly caused by or arising out of war, invasion, acts of foreign enemies; hostilities, civil wars, rebellions, revolutions, riots, strikes, barriers to entry to work, civil disturbances, takeovers of power; malicious acts with a political background, conspiracy, confiscation or destruction intentionally at behest of the government or at behest of the authorities; nuclear reactions, nuclear radiation or radioactive contamination; and willful acts or omissions by insured or his representatives.

General conditions that apply in EEI policy for the three covers are insured's obligation to comply with terms and policy concerned (terms of policy); policy summary status of policy concerned; insurer's recommendation and manufacturer's recommendation;right of insurer to conduct inspections and government on risk; things that must be done by the insured in the event of an event that can give rise to a claim on policy; insurer's subrogation rights; appointment of an arbitrator in the event of a discrepancy in amount to be paid under the policy; fraudulent claims; contribution (contribution); termination of policy; insurance for a third party's account; and time of claim payment.

When conditions potential to give rise to claim rights occur, four important things that must be done by insured are as follows:

  1. Notify insurer immediately by telephone or telegram and in writing. In notice to be informed of nature and extent/amount of loss or damage. 
  2. Take steps within its capabilities to minimize loss or damage that occurs.
  3. Maintain and prepare property that has suffered such loss or damage to be inspected by insurer or his appointed representative.
  4. Report to police department in the event of loss or damage due to burglary.

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