Equipment warranties themselves are not typically considered insurable losses in the same way that physical damage or loss of property due to covered perils like fire, theft, or natural disasters are. Instead, warranties are contractual agreements between the equipment owner and the manufacturer or provider, outlining the terms and conditions under which repairs or replacements will be provided if the equipment fails within a specified period.

However, if the failure of the equipment is due to a covered peril under an insurance policy, such as fire, and the warranty provides for repair or replacement of the damaged equipment, the cost to reinstate the warranty as part of the repair process may be considered a consequential loss and could potentially be covered under the insurance policy, subject to the terms and conditions of the policy.

In other words, while the warranty itself may not be directly insurable, the costs associated with reinstating the warranty in the event of covered damage to the equipment may be eligible for reimbursement as part of an insurance claim, depending on the specifics of the policy coverage and the circumstances of the loss. It’s important to review the terms of the insurance policy and consult with the insurance provider to determine coverage for warranty reinstatement costs in the event of equipment damage.

When facing a situation where an electronic equipment manufacturer threatens to void your warranty due to a loss incident, consider the following steps:

1. Review the Warranty Terms: Carefully review the warranty terms provided by the manufacturer. Pay close attention to any clauses or provisions related to water damage or environmental exposure. Understanding the specific conditions under which the warranty may be voided will help you assess the situation and determine your next steps.
2. Document the Damage: Document the damage to the electronic equipment (or lack of) and the circumstances surrounding the loss incident. Take photographs or videos of the equipment showing any visible signs of water damage, such as water stains, corrosion, or malfunctioning components. Keep records of the date and time of the incident and follow-up response and findings.
3. Contact the Manufacturer: Reach out to the manufacturer to discuss the situation and seek clarification on their decision to void the warranty. Provide them with detailed information about the extent of the exposure and any steps you’ve taken to mitigate further damage. Request that they reconsider their decision and provide justification for their position based on the warranty terms.
4. Seek Professional Assessment: If possible, obtain a professional assessment of the equipment to determine the extent of the incident and whether it had damaged or compromised the functionality or reliability of the equipment. A qualified technician or electronics specialist may be able to provide a detailed evaluation of the equipment’s condition and whether the damage is covered under the warranty.
5. Consult Legal Advice: If you believe the manufacturer’s decision to void the warranty is unjustified or if you encounter resistance in resolving the issue, consider seeking legal advice. An attorney with experience in consumer protection and warranty law can help you understand your rights and options for recourse, including potential legal remedies or avenues for dispute resolution.
6. Explore Alternative Solutions: If the manufacturer remains unwilling to honor the warranty, explore alternative solutions for repairing or replacing the damaged equipment. Consider third-party repair services or independent technicians who may be able to assist with repairing the equipment outside of the manufacturer’s warranty coverage.
7. Consider Future Protection: Going forward, take proactive measures to protect your electronic equipment from potential damage due to natural disasters or environmental hazards. Invest in protective measures such as waterproof enclosures, surge protectors, or off-site backups to minimize the risk of damage and ensure continuity of operations in the event of future incidents.

By taking these steps, you can effectively address the challenge of a threatened warranty voiding by an electronic equipment manufacturer due to an unfortunate incident.  Likewise, taking these steps will help support your claim should the Insurance Company deny the costs to reinstate the warranty or service agreement.

It’s been over three decades since I worked in one of the top research laboratories in the USA following a major water loss incident.  While I was surrounded by countless PhD’s and Postdoctoral Research Fellows and humbled by their research and subject matter intellect, I was amazed by what they didn’t do following the incident. For example, they didn’t attempt to perform the most common mitigation tasks such as moving instruments when it was apparent that water started to rain down from the ceiling near very expensive lab equipment.  Worse yet, several of the machines were “smoke tested” the following day to determine if they still worked.  You can probably guess how that ended.

A few months later I experienced the same surprise when I was working at a teaching hospital laboratory following a small fire incident.  Again, I was amazed that very few of the affected stakeholders took any reasonable measures to mitigate damage or help facilitate the recovery process.  It was then that I began to believe that there may be an inverse relationship between education and common sense.  For comparison, facility maintenance staff (who generally may not hold post graduate degrees) routinely mitigate complex losses and are generally very proficient at facilitating the recovery and claims processing.  Why the apparent disconnect?

It dawned on me last week while reading Lee Lefever’s book “The Art of Explanation” that the curse of knowledge may be the underlining problem.  When we do things every day, we take for granted that everyone around us is familiar with what needs to happen next.  The research staff immediately considered the situation catastrophic and intimately focused their thoughts on how they were going to start over (the sky is falling response).  Conversely, the facility maintenance staff considered the incident as a minor inconvenience and simply pushed through the recovery process.  Each group had a completely different perspective of the situation and found difficulty in communicating their objectives and priorities.

As I continued reading “The Art of Explanation” I realized that I fall short of communicating.  Too often I assume that everyone around me knows what I know when dealing with a disaster in a technology-rich environment, instead of explaining everything needed from the affected stakeholders to restore their laboratory and get back to business as usual.  Moving forward, I’ll work on improving my art of explanation.  As a tool, I also thought it would be helpful for me to focus on the most common mistakes that I’ve seen Insured’s make that cause problems in the recovery and claims process.  Here’s the list of mistakes that I’ve compiled, as well as its likely impacts:

1. Failure to Document Damage: Not documenting the extent of the damage thoroughly can lead to complications during the insurance claims process. Detailed documentation through photographs, videos, and written descriptions is essential to support the claim.  Where applicable, engage independent experts on the front-end to assess damages and provide recovery options.
2. Delay in Reporting: Failing to report the incident promptly to the insurance company can result in delays in the assessment and processing of the claim. Timely reporting ensures that the insurer can initiate the claims process efficiently.
3. Inadequate Understanding of Coverage: Not fully understanding the insurance coverage and policy limits can lead to unexpected gaps in coverage. It’s essential for risk managers to review their insurance policies carefully and consult with their insurance agents or brokers to understand the extent of coverage.  Also, Risk Managers need to be very proactive and explain the policy to the affected stakeholders BEFORE they start talking with equipment manufacturers and vendors.
4. Lack of Communication: Poor communication among involved parties, including researchers, laboratory staff, risk managers, insurers, and adjusters, can lead to misunderstandings and delays in the claims process. Clear and open communication is crucial for efficiently resolving issues and coordinating recovery efforts.
5. Failure to Mitigate Further Damage: Neglecting to take immediate steps to mitigate further damage following the disaster can result in increased losses and complications with the insurance claim. Insured parties should take appropriate measures to secure the laboratory and prevent additional damage.
6. Inadequate Record-Keeping: Insufficient record-keeping related to laboratory equipment, inventory, research materials, and other assets can hinder the accurate assessment of losses and the determination of appropriate compensation by the insurance company.
7. Underestimating Losses: Underestimating the extent of losses, including property damage, equipment replacement costs, and business interruption expenses, can result in inadequate compensation from the insurance company. Insured parties should conduct a thorough assessment of all losses to ensure they are properly accounted for in the claim.
8. Not Seeking Professional Assistance: Attempting to navigate the insurance claims process without professional assistance can be challenging, especially in complex cases involving significant losses. Seeking expert guidance can help insured parties understand their actual damages and maximize their recovery.
9. Ignoring Safety Protocols: Failing to prioritize safety protocols during the recovery process can jeopardize the well-being of laboratory personnel and hinder the restoration efforts. Insured parties should prioritize safety measures to prevent accidents or injuries during the cleanup and recovery phase.
10. Overlooking Policy Exclusions: Neglecting to review and understand the policy exclusions can lead to disappointment when certain types of damage or losses are not covered by the insurance policy. Insured parties should be aware of any exclusions and plan accordingly to mitigate risks not covered by insurance.

By taking a more common-sense approach, insured parties can often navigate the aftermath of a disaster in a technology rich environment more effectively and maximize their chances of a timely recovery and successful insurance claim settlement.

Sometimes you need to slow things down to go faster.  This can be especially true when dealing with sensitive data processing or equipment following a disaster event.  For instance, I’ve witnessed many organizations assume that all equipment was destroyed and immediately order replacements only to learn later that most of the equipment assets were not affected.  Conversely, I’ve seen too many other organizations have a brighter prognosis of the situation only to cause subsequent damage by prematurely returning power to the assets or failing to acknowledge the long-term effects of the incident.  Slowing down the recovery process following a disaster incident in a facility containing significant electronic equipment and technology assets may seem counterintuitive at first glance, but it can have several benefits:

1. Thorough Assessment: Taking time to slow down allows for a more comprehensive assessment of the extent of the damage. Rushing into the recovery process without a clear understanding of the damage could lead to overlooking critical issues or making hasty decisions that could worsen the situation.
2. Risk Mitigation: Electronics and technology assets are often sensitive to environmental factors such as water, heat, and electrical surges. By slowing down the recovery process, teams can take the necessary precautions to mitigate risks associated with further damage, such as implementing proper drying and/or preservation techniques, securing power sources, and ensuring proper grounding.
3. Preservation of Data: In environments with significant electronic equipment, data loss can be catastrophic. Slowing down the recovery process allows for more careful handling of storage devices and data recovery procedures. Rushing through the process could increase the risk of irretrievable data loss.
4. Resource Allocation: A slower recovery process enables better allocation of resources. By carefully prioritizing which equipment and systems to restore first, based on their criticality to operations, organizations can ensure that limited resources are used effectively and efficiently.
5. Quality Assurance: Rushing through the recovery process may result in shortcuts being taken to expedite the restoration of operations. This could compromise the quality of the repairs and increase the likelihood of future failures. By slowing down and following established protocols and procedures, organizations can ensure that repairs are done correctly the first time, reducing the need for costly rework later.
6. Stakeholder Communication: Slowing down the recovery process allows for more effective communication with stakeholders, including employees, customers, and investors. Providing regular updates on the progress of the recovery efforts, even if it means acknowledging delays, can help manage expectations and maintain trust in the organization’s ability to recover from the incident.

In summary, while the instinct may be to rush through the recovery process in the aftermath of a disaster, taking the time to slow down and approach the process methodically can ultimately lead to a more successful outcome, minimizing further damage and ensuring a smoother restoration of operations.