Insurance Law Lesson 103: Electronic Data in a CGL

The standard commercial general liability insurance coverage policy form covers “property damage” caused by an accident. The definition of “property damage” (physical injury to tangible property or loss of use of tangible property) states that “electronic data is not tangible property.” Electronic data is defined to mean basically all things zeros and ones in a computer. So, if the big important file gets corrupted, or if the hard drive gets wiped, it will be a tough sell to call that “property damage.”

Moreover, the property damage coverage specifically excludes coverage for damage arising out of loss of or loss of use of electronic data. (The exclusion is part of coverage A, which also includes bodily injury, but there is an exception to the electronic data exclusion for bodily injury).

Recall that this is liability coverage, not first party. Meaning that these issues would arise if the policyholder were sued for corrupting/wiping/etc of somebody else’s data.