What value would you place on the music, photos, and videos you’ve bought online and downloaded to your phone or computer? And if they were lost, if a virus infected your computer for example, would you be able to claim it back?
The majority of home insurance policies, while covering physical contents in a person’s home, do not specify which digital products they cover, new research claims.
There is also a huge discrepancy between what’s covered, the amount you can claim for them, and the policy exclusions.
Insurers use vague and inconsistent wording in policies when it comes to digital assets
Of 26 insurance policies analysed, 20 state that they offer some kind of protection for loss or damage to digital assets but do not specify what is actually included.
The research, from comparison website Comparethemarket, states that the wording for digital assets is often vague and inconsistent between home insurance policies.
Only five insurance policies state that they cover specific assets such as music or videos, while only two policies mention cover for photos.
Instead, most policies use the term ‘electronic data’ or ‘downloaded content’ without stating what is included under these terms.
Some insurers say they will only pay to replace legally downloaded assets if they are still available, but will not rewrite or remake them if they’ve been damaged, while others say you must have a receipt in order to claim.
Pay outs for claims also vary considerably and range from £500 to £10,000 across policies with an average of £1,000. Six policies don’t specify a limit amount, even though they do say they cover digital assets.
While it can be unclear exactly what’s covered, the website says insurers are much better at stating the exclusions.
Of the 26 policies looked at, 17 state they don’t cover damage or loss if it’s the result of a virus or malicious software.
Just eight will cover contents stored on a phone as well as on other devices such as a laptop or desktop computer.
Six policies say they will not cover loss of data if a computer has failed to ‘recognise, interpret or process correctly any date as its true calendar date or its ability to function correctly beyond that date’.
This wording relates to the ‘Millennium Bug’ in 2000 where some computer files became corrupt because they weren’t able to cope with the date change.
Pay-outs for claims vary considerably among insurers and range from £500 to £10,000
There is also a lot of confusion around how much digital assets are worth, and in a study of 2,000 people 37 per cent said recently said they would have no idea how to calculate them.
Chris King, head of home insurance at Comparethemarket.com, said: ‘Many people have no idea how much their digital assets are worth but would be devastated if they lost expensive games, files or precious photographs.
‘In an age of big data, when more and more of our ‘contents’ are stored online, it seems the insurance industry has not yet adapted to keep up with the times. If there is a fire in the house and your CD collection is destroyed, you are reimbursed for the cumulative loss of these items. Why should it not be the same with your digital music library?
‘There will always be differences between policies, which is why it is always advisable to read your terms and conditions.
‘However, with digital assets in particular, there needs to be more standardisation and clarity across the industry, just as consumers expect from all other insurance products.
‘Levels of cover vary wildly between different policies so, if you have a lot of digital assets, it’s worth checking your policy and shopping around if you don’t feel your current one meets your needs.’
Given the rise in cyber-attacks and the inconsistent approach from insurers, it’s especially important to make sure you’re regularly backing up your digital downloads in case something happens.
On top of this it’s also important to make sure you are as protected as possible, by regularly updating your anti-virus software, choosing different passwords which aren’t easily guessed, keeping personal details off social media and avoiding using wifi connections for things such as online banking.
There are a whole host of quick and simple things you can do in order to protect yourself, and our guide on seven steps to protect you and your money from getting hacked is a good place to start.
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