What To Look For In a Data Breach Liability Policy
If you haven’t read part 1 and part 2 of our data breach series yet, please do so here:
Data breach liability insurance is a must for businesses operating in today’s technology driven business climate. Finding the right coverage to meet your data breach liability needs is critically important. In order to do that, look for policies that offer the following types of coverage to your business.
Data Forensics and Legal Assistance in Determining Scale and Scope of Breach
The ability to track, trace, and determine the extent and potential damage of a breach is vital so that you can help people affected by the breach make informed decisions about their future actions. Sadly, it is also expensive. You need to make sure your policy provides this important coverage, but also that it provides an adequate dollar amount of coverage – something many businesses do not learn until after the fact.
Image Consulting – Public Relations – Reputation Management
In the aftermath of a data breach, the credibility and reputation of your business are likely to take a hit. Insurance coverage that provides these types of services for your business will help minimize the damage of that hit and help you take steps to recover quickly by showing the public that you’re taking the matter seriously, making positive strides to prevent this from happening in the future, and interested in establishing goodwill. The future of your business could very well depend on these types of services which do not come cheap.
Notification Fees and Credit Monitoring Costs
The costs of notifying customers, employees, and others about the breach can add up quickly. Providing those affected – or even potentially affected – with credit monitoring services for a period of time following the breach is a standard show of good faith on your part after a breach occurs. Look for policies that offer some, if not complete, coverage of these things.
Business Interruption Insurance
When someone takes over your computers, breaches your security, and otherwise gains access to your information, it will bring your business to a grinding halt until certain facts are determined. There will be a forensics investigation that may render you unable to operate your business in the process. This can result in lost income for the business that becomes even more costly every day you’re out of operation. Still the bills continue, including employee wages, property expenses, utilities, services, etc. Business interruption coverage helps you pay the bills while the investigation continues.
Cyber Liability Coverage
This involves a hacking or virus attack that causes financial loss to another person or business and you are sued as a result.
System Damage Coverage
The insurer will pay to repair or restore your data or your computer systems damage as a result of a cyber peril.
Data breaches from the outside are not the only way information about employees or customers can be leaked to the outside world. For this reason it’s equally important to make sure your insurance covers privacy liability as well. This offers coverage for things like employees sending private financial information to the wrong email address or failing to properly dispose of documents that are no longer necessary. These aren’t exactly instances of a data breach or hacking evet, but are events your business could be held legally responsible for.
Data breach liability insurance coverage is no small thing for today’s businesses. IBM’s Cost of Data Breach Study reveals that in 2016, the average cost of a data breach, per event, is four million dollars. It is no small cost and can be devastating for the average small or medium sized business.