Data Breach Insurance
A data breach is the intentional or accidental release of secure information to an unsecured environment. Common terms used to describe data breach include data theft, data loss, cyber security, identity theft, and cyber liability. A breach is typically a single incident where confidential, or protected information, is either transmitted, viewed, copied, or stolen by anyone who is not authorized to have access to the data.
The most common forms of data breach involve personal or financial information such as credit card numbers, bank account information, personal data such as social security numbers and health information, and trade secrets or intellectual property. Most incidents of data breach do not pose a real threat to the public because the breach is repaired before it falls into the hands of unethical people. However, when customers know there has been a breach, they will often demand assistance in mitigating the risk and accessing their credit scores. The value of data breach insurance to a business is the proactive assistance with assisting customers after a breach happens.
Over 75% of all data breaches and cyber liability insurance claims come from small business owners.
Data breach goes beyond the Internet and data stored online for customer access. Most covered breaches by insurance companies involve other forms of digital media stored on laptops, computer tapes, or hard drives. Other forms of breach include employee and former employees who retain access to restricted data after their employment terminates.
Cyber Liability Insurance
Cyber liability is at the heart of a data breach policy. Many insurance companies have developed sophisticated cyber liability programs that help business owners address the risks of data breach before there is an incident. They also provide post breach services to help repair the breach, notify customers, manage public relations, and monitor credit reports. Current U.S. statistics indicate that the average cost of a data breach is around $185 per lost record.
Cyber liability and data breach coverage generally applies to all risks for data privacy and network security. A typical policy would respond to claims caused by internet hackers, problem employees, malicious software, and hardware theft.
Benefits of Data Breach Insurance for Business Owners:
✓ Network security liability
✓ E-Media liability
✓ Notification expense
✓ Credit monitoring costs
✓ Public relations management
✓ Fines and penalties
✓ Cyber investigation expense
Small Business and Cyber Liability
Most people assume data breach insurance is strictly for the big boys like Target, Home Depot, and Sony. A common misconception small business owners have is that thieves wouldn’t bother targeting a small business because there is not a big enough return.
Credit Card Data Breach
Credit card data breach is the most expensive and prominent type of data breach. It’s also the most common data captured and stored by companies. The average individual has their credit card on file with 6 or more small businesses for recurring transactions and billing. Nearly 86% of all credit card processors were effected by the Target breach. The costs associated with replacing credit cards, paying for fraudulent charges, and repairing credit can be staggering. At the end of the day, the company held liable for the breach, or the data breach policy, is held responsible for these costs.
Cyber Insurance Quote
The cost of cyber liability, or data breach insurance boils down to a businesses risk exposure for a breach. Most insurance companies that quote cyber insurance will want to underwrite the insurance rates based on a) nature of business, b) estimated likelihood of a claim, c) security measures in place, d) number of employees, e) policy limits and deductibles, and f) the range of coverage.
General Liability Shop.com offers data breach quotes from up to ten national and regional insurance companies offering cyber insurance products. We shop your coverage with all applicable carriers and then provide a detailed comparison of each carriers’ rates, coverages, and benefits.
How Insurance Companies Help Repair Data Breach
The single most important part of data breach insurance is how your insurance company helps your business after an incident occurs. The initial step taken by most carriers is to provide breach assistance in order to help determine how the breach occurred and the severity of the breach. Once that has been assessed, insurance carries will provide assistance with notifying customers based on each states’ regulatory requirements. Your insurance company should also provide public relations assistance in the event your reputation is damaged.
Most states now have stringent laws in place that require businesses to take specific actions for their customers in the event of a known data breach.
Most insurance companies that offer data breach insurance will hire out services to help monitor customer credit reports and identity theft alerts for a period of time (typically 6 months to a year). Your insurance company should also help your business document and record all steps taken to repair or contain the breach as well as all remediation services provided to consumers. This documentation will be useful in the event of a lawsuit.
Data breach coverage is not included with a standard general liability or professional liability insurance policy. Cyber liability can be added to a Business Owners Policy.
Learn more about a BOP Policy.