What Insurance Covers Business Data Loss?

For lost or corrupted business data after a cyber incident, cyber insurance is often the first policy to review. FTC guidance identifies recovery and replacement of lost or stolen data and forensic investigation as possible first-party cyber expenses. A sample crime form also contains a separate restoration-expense agreement for computer programs or electronic data damaged by a defined computer violation, subject to conditions such as inability to reproduce the data from backups. That narrow specimen provision should not be assumed to exist in every crime policy.

Coverage depends on why the data disappeared. Malicious encryption, accidental deletion, hardware failure, a vendor outage, and a routine software bug may fall under different terms or separate policies. Electronic data can also be treated differently from tangible property in standard property wording, and restoration costs may have a sublimit or be included within another limit.

Check whether data restoration is included and what events trigger it, whether cloud-hosted and third-party data qualify, if backup availability affects payment, and whether lost income is separately covered. Review waiting periods, vendor service terms, retention, and the policy’s definition of electronic data and computer system.