Did you know that fifty-five percent of small businesses have experienced a data breach or other cyber crime, and 53% have had more than one data breach?
Protecting your business’s data is of paramount importance.
Data breaches and other cyber crimes are becoming increasingly common and they not only result in monetary losses, loss of customers or clients, and damage to your business’s reputation, a data breach can result in major fines or legal fees.
While carrying data breach insurance won’t necessarily prevent a cyber crime from occurring, data breach coverage or cyber liability insurance can help you and your business recover financially from a data breach.
This is why purchasing a solid cyber policy is a smart decision for any business owner.
What is Data Breach Insurance?
Data breach insurance or cyber crime insurance is designed to cover your company’s liability if a data breach occurs and gives identity thieves or other cyber criminals access to the type of sensitive customer information that allows for identity theft, such as personally identifiable information (PII) like social security numbers, bank account info, credit card numbers and expiration dates, driver’s license numbers, and any kind of medical records or personal health information (PHI).
As a business owner, you should always remember that no matter how good you think your IT security is, data breaches, like identity theft, can happen to the best of us – and the best of businesses.
That’s why it is so important to carry the appropriate amount of cyber security coverage.
Why Do You Need Data Breach Insurance?
What is a data breach?
The definition of a data breach is when sensitive, confidential, or otherwise protected data has been confirmed to have been accessed by unauthorized individuals or otherwise disclosed via illegal or stealth methods.
The types of data that apply include bank account and credit card info, social security numbers, driver’s license numbers, any kind of PHI (personal health information) or medical information, and other PII (personally identifiable information).
Your company’s trade secrets and intellectual property can also be the subject of a data breach claim.
If you think that your general liability insurance policy covers data breaches and cyber crimes, you may want to think again.
General liability insurance typically covers bodily injuries and property damage resulting from your company’s operations, services, or products; cyber crimes and data breaches tend to be excluded from these types of liability policies.
Check with an ASCO insurance agent if you are unsure about your coverage and make sure that your business is protected.
What Does Data Breach Insurance Cover?
Data breach or cyber security insurance policies typically cover legal fees and other expenses (including fines) resulting from a data breach, the costs of notifying customers about the data breach, helping said customers restore the security of their personal identities, recovering any compromised data, and even repairing damaged computer systems (both hardware and software).
Be aware that most states require a business to notify clients of any data breach involving PII and PHI – and this process can get costly if you don’t have data breach insurance.
Offering your customers free credit monitoring for a certain time period after a data breach is often not required, but if your business’s data breach and lack of cyber security goes, giving the affected parties access to a credit monitoring service can be a wise move towards improving public perception of your company.
How Much Does Data Breach Insurance Cost?
The cost of data breach insurance varies based on a variety of factors, including the amount and type of customer data that your business keeps, how it is stored, and the type of business you are in.
Data breach insurance can carry a nominal cost; however, the costs of fines, lawyer fees, bank and credit card company penalties, forensic investigations, and more can be significantly expensive – depending on the type of info breached, the costs of a data breach or cyber crime can run into the thousands or even millions.
In today’s information age, keep in mind that your business can hardly afford not to carry data breach insurance.
If your secure information hasn’t been hacked or compromised yet, it can only be a matter of time, no matter how locked down or secure you think things are – so it is best to be prepared.
What Other Types of Insurance Are Related to Data Breach Insurance?
Any other forms of business or commercial liability insurance, professional liability insurance, or any other coverage that protects your business’s clientele’s PHI, PII, and your trade secrets and intellectual property.
Contact an ASCO Insurance specialist to determine the best data breach insurance package is right for your business.
