Cyber Security & Compliance  01/28/2015

What Businesses Need To Know About Data Breach Exposure

By Chris Hidalgo

Recent data breaches affecting businesses of all sizes have raised consumer awareness. Smaller businesses are more likely to suffer the consequences because there are fewer resources and employees at their disposal. With the loss or theft of just 1,000 client records from a lost or stolen laptop, a data breach claim can easily reach $150,000 or more. If you have a website, use social media or store valuable information in your computers, you are vulnerable to a cyber attack.

General liability insurance and E&O policies do not appropriately cover these costs under state or HIPAA data breach laws. But with data breach insurance, you can not only avoid spending thousands of dollars on losses, you can also benefit tremendously by being protected.

  • Data Recovery: If a virus obliterates your company’s software and infects your clients’ computers, a data breach policy will pay for the cost of restoring the computers and/or buy new ones if needed.
  • Handling Customer Calls: Instead of getting hit with a deluge of phone calls from customers who had their information hacked, having data breach insurance would provide a dedicated call center for them to call.
  • Electronic or Physical Records: Losing a printed list of clients’ Social Security numbers, for example, would be covered by having data breach insurance. The policy would cover the costs of notifying customers.
  • Notification: Once a cyber attack is discovered, persons who must be notified under applicable law or are subject to risk of financial, reputational or other harm will receive notification based on number of affected individuals.
  • Legal Aid: If a data breach results in legal action, your plan could help you find expert counsel, as well as cover legal fees and judgments against you.
  • Social Media Liability: Any employee who is angry with another employee or the company can slander them on social media pages such as Facebook and Twitter. Most standard business policies don’t cover slander on social media but data breach insurance does.

Sources:

  • Inc.
  • InsuranceNewsNet
  • Nasdaq
  • PR Newswire
  • Risk Management Monitor