Other Than Life (OTL) Practice Exam

What is usually excluded from an Electronic Data Processing Package Policy?

1. Computer hardware

2. Damage by electrical disturbances other than lightning

3. Computer software

4. Extra expenses due to insured peril loss

The correct answer is: Damage by electrical disturbances other than lightning

The correct option points out that damage caused by electrical disturbances other than lightning is generally excluded from an Electronic Data Processing Package Policy. This is important because such policies are designed specifically to protect businesses from risks associated with their electronic data processing systems. Electrical disturbances, like power surges or dips that do not relate specifically to lightning, can cause significant damage to computer systems; however, many policies will not provide coverage for such risks. This exclusion helps clarify the boundaries of coverage, ensuring that policyholders understand the limitations of their insurance. In contrast, computer hardware and software are typically included under these policies, as they are essential components of data processing operations. Extra expenses due to insured perils are also commonly covered since these expenses are a direct result of restoring operations after a covered loss. Knowing what is excluded is critical for insured parties to manage their risks appropriately.