American Association of Insurance Services (AAIS) Form

Summary: EDP coverage is intended to provide special perils coverage for computer hardware, software and website servers. Software includes data and media. In addition, the form can provide time element coverage that arises from direct losses to data processing equipment. EDP coverage usually includes two causes of loss that commonly damage computer equipment—electrical disturbance and mechanical breakdown. These two causes of loss are excluded from standard property coverage forms and are among the major reasons for purchasing special EDP coverage as opposed to insuring computer systems on a property policy. Therefore, when placing coverage, it is important to look for forms that incorporate coverage for electrical disturbances and mechanical breakdown. This treatment discusses two forms published by the American Association of Insurance Services (AAIS). EDP form IM 7200 is intended to provide broad special perils coverage for risks with total values over $250,000, at scheduled locations with scheduled limits. EDP form 7202 provides the same coverage for risks with total values over $250,000, but with blanket limits applying to all scheduled locations.

Form 7201 provides coverage for risks with values up to $250,000, but also provides business income coverage.

The key differences in the forms, aside from the values, lie in the property covered, additional coverages, and property subject to limitations sections.

Topics covered: Agreement Definitions Property covered  – IM 7200 Property covered  – IM 7202 Property not covered Coverage extensions Supplemental coverages – IM 7200 Supplemental coverages – IM 7202 Perils covered Perils excluded What must be done in case of loss Valuation How much we pay Loss payments Other conditions Available endorsements

Agreement

In return for “your” payment of the required premium, “we” provide the coverage described herein subject to all the “terms” of the Electronic Data Processing Coverage. This coverage is also subject to the “declarations” and additional policy conditions relating to assignment or transfer of rights or duties, cancellation, changes or modifications, inspections, and examination of books and records.

Endorsements and schedules may also apply. They are identified on the “declarations”.

Refer to Definitions for words and phrases that have special meaning. These words and phrases are shown in quotation marks or bold type.

Analysis

The agreement states that, in exchange for a premium, the insurer will provide EDP coverage as described on the declarations of the policy. Also applying to the coverage are any additional policy conditions, endorsements, and schedules that are indicated as part of the policy.

Definitions