What is Data Breach Insurance?
What is Data Breach Insurance?
Some small business particularly those in the medical field rely on computers to store client or patient data. As we become more digitized, concerns about cyber security and data breaches are increasing.
Digitizing your records can help to improve the safety of your small business records since online records can be password-protected and less likely to be stolen or misfiled, the way paper records can. However, small business online records, as well as paper records, are both prone to security concerns.
So, what is Data Breach Insurance?
Data breach insurance can help you cover a variety of items related to a cyber or data breach. The following in a list of things that a policy can cover.
- Asset protection. The costs associated with recovering and replacing data which has been corrupted, lost or damaged due to online crimes or attacks.
- After-hack costs. The costs of online credit monitoring, the expenses of notifying clients of a hack and other costs related to a security breach are addressed by this coverage.
- Privacy liability and security liability. Claims alleging that you did not do enough to prevent a hack or to secure online information are addressed.
- Claims stemming from third-party negligence. Even if you take steps to secure your online records and data, you are likely passing data back and forth with other offices and professionals. In addition, you may be using third-party software or online services to store data. If your clients or other data is hacked due to the software design or negligence of others (employee negligence for example), you may still need to defend yourself if you are named in a claim.
- Regulatory non-compliance issues. Failure to follow data compliance standards can result in hefty fines. The Personal Information Protection and Electronic Documents Act (PIPEDA) is a Canadian law relating to data privacy. It governs how private sector organizations collect, use and disclose personal information in the course of commercial business. Canada and GDPR: On November 1, 2018 , mandatory breach notification is coming into force in Canada. It means that if you suffer any type of loss of personal information that causes a real risk of significant harm you will have to report it to the Privacy Commissioner of Canada and notify all individuals affected. If you don’t, you are subject to fines of up to $100,000 per individual that should have been notified and was not notified.
Data breach insurance is important because the costs of a data breach are substantial. You may need to investigate to determine where the breach took place and may need to update or completely revise and update your software system and online data storage system to protect it in the future. In addition, a data breach directly affects the reputation of your small business. Insurance in the case of a data breach allows you to at least cover legal and fine or penalty costs.
If you would like more information on data breach insurance for your small business, I am here to guide through and find a policy that will work you.