Cloud computing—outsourcing IT services to a third party via the internet—is rapidly gaining popularity among small and midsize businesses. In response, Erie Insurance adds cloud computing to its equipment breakdown coverage.
PRODUCT: TechAdvantage™
COMPANY: Erie Insurance
BEST RATING: A+ (Superior)
AVAILABILITY: Coverage is available through independent agents and brokers.
FOCUS: Cloud computing—outsourcing IT services to a third party via the internet—is rapidly gaining popularity among small and midsize businesses. The percentage of companies that are switching to cloud computing for their storage needs is expected to more than double over the next six years, from 37% to 80%.
To meet the needs of these businesses, Erie Insurance has added cloud computing to TechAdvantage™, its equipment breakdown coverage. The coverage and associated services are available through a partnership with the Hartford Steam Boiler Inspection and Insurance Company.
“Cloud computing helps companies save money by enabling them to store their electronic assets in data centers or warehouses and ‘rent’ access to them, paying for only the IT assets they use,” explains Christine Lucas, vice president and commercial multi-peril product manager at Erie Insurance.
But this useful service also creates many risks, including service interruption and data loss. Consider findings from a recent survey from Hartford Steam Boiler and the Ponemon Institute that nearly half of business cloud users (48%) have experienced a service interruption—and 56% said at least one of these interruptions prevented their company from functioning.
“The cloud isn’t literally in the sky—it’s in physical buildings that can experience power outages and equipment breakdowns,” Lucas explains. TechAdvantage™ pays for equipment losses when tiny electronic circuitry—such as pieces of circuit boards and computer chips embedded in many of today’s products—stops working for no apparent reason.
“Because business owners continue to move toward cloud computing, it is our job to help educate them on the risks,” Lucas says. “We also need to ensure they are protected if they experience data loss or service interruption, which could be devastating to a smaller company.”
UNDERWRITING: Coverage includes data research, repair and restoration services; direct property loss for the cost to repair or replace covered equipment that is damaged; lost business income and extra expenses when a customer’s cloud service provider experiences an outage or equipment breakdown for covered reasons; and failure of microelectronics when physical damage cannot be detected.
Because outages and data breaches can damage a company’s reputation, coverage also includes up to $5,000 in public relations expenses for a professional services firm to assist in communicating with clients, the public and the media.
MINIMUM PREMIUM: None.
TARGET: Small to midsize businesses that operate in the cloud or use equipment with microtechnology.
COVERAGE TERRITORY: DC, IL, IN, KY, MD, NY, NC, OH, PA, TN, VA, WV and WI.
CONTACT: Christine Lucas, vice president and commercial multi-peril product manager; Erie Insurance, 100 Erie Insurance Place, Erie, PA 16530-1104; 800-458-0811.
Ronimarie Acord is an IA contributor.
