Your company deals with data. Whether it’s employee data, customer data, proprietary data, or something else - data is part of your business. The scary thing is that data has never been more at risk. With record numbers of data breaches and cyber attacks, it’s more crucial to have data breach insurance now than it’s ever been. Many businesses may not even know that big data insurance even exists or how it works.
Here is what you need to know about how data insurance works and how it can protect your business.
Data breach insurance ultimately is an insurance policy that covers financial losses that come from a data breach. There are a variety of policies that fall under the data breach insurance umbrella, including cyber liability insurance, big data insurance, technology errors and omissions insurance, and more.
Businesses that experience data breaches deal with high costs from the aftermath. Few business owners can afford to pay these costs out of pocket. While investing in cybersecurity is a significant first step, there is always a risk. Data breach liability insurance exists as a layer of protection in case a cyber attacker is successful.
Hackers often target personally identifiable information, health information, or company information. This data can be used to steal identities or commit a number of other types of fraud. If your company’s computers store private and sensitive information, you work in an industry that has strict rules about how customer/client data is stored, or you’re worried about what would happen to your company’s reputation after a data breach, data insurance could be right for you.
While there are numerous types of data insurance with the same general goal, there are some significant differences between them.
This is often geared toward larger businesses. It protects these companies from the financial losses associated with cyber attacks. Let’s say, for example, that a hacker gains access to your system and starts locking computers. They delete files and demand ransom to restore your access. Locked computers might impact your clients in such a way that they file a lawsuit. This scary situation is one that companies find themselves dealing with more often than they’d like.
Cyber liability insurance helps in a number of ways. This coverage can help cover the cost of lawsuits related to customer or employee data security and regulatory fines from state and federal agencies. Cyber liability insurance can also help cover lost income from network outages, fees paid in ransomware attacks, and the expenses incurred from letting customers know that their personal data has been compromised.
Data Breach insurance, on the other hand, is geared towards your company’s response to data breaches. This could be from a hacker breaking into your company’s computer or an employee leaving an unlocked company laptop unattended at a coffee shop. Small businesses are often more interested in data breach insurance since they are less likely to be targets of ransom attacks.
Data breach coverage helps cover the cost of credit monitoring services to data breach victims, the expenses associated with notifying affected parties and even hiring a public relations firm. There are additional coverages that you can add to your data breach insurance, like business income coverage and extortion coverage.
Your data recovery insurance provider can work with you to help decide which kinds of data insurance policies and plans are best for your business. There is no one-size-fits-all approach to data insurance, so make sure you discuss your options before you buy.
While cyber liability and data breach insurance seem targeted at protecting your business from attacks, data insurance can also cover other instances that are just as common. For example, an in-house mistake could result in the loss of data. Data recovery insurance plans exist to deal with the aftermath of these kinds of events. From dealing with lawsuits from customers to replacing fault equipment that caused the data loss, data insurance plays a critical role in getting back into business.
Just like other forms of insurance that your company may need, cyber liability and data breach policies are meant for specific areas. Typically, these kinds of policies cover malware attacks, malfunctions, insider data breaches, data theft, ransomware, and employee mistakes. That means you may need additional insurance policies or plans to be fully protected. Your business and industry will determine what kind of plans are most appropriate for you.
Here are some areas that cyber liability and data breach insurance policies do not cover:
Since big data insurance isn’t a cookie-cutter policy, there isn’t necessarily a price that everyone will pay. Your costs will be different than other companies in your area or industry. Your data breach insurance’s cost will vary based on a few factors:
It’s easy to think that a data breach or loss can never happen to you. Sadly, no one can predict who hackers might attack or when catastrophe will strike. When it comes to protecting your business, a good offense is better than waiting until it’s too late.
Whether your business is large, will have millions in annual revenue, or you’re just starting out and want to start on the right track, data breach insurance is worth investigating. With Assured Standard, you can get the protection you need without the hassle. Call today to get your free quote and learn more about how Assured Standard can protect your business.
Want to delve deeper into the investigative side of insurance, especially when a data breach occurs? Explore our comprehensive blog post about forensic investigation in insurance, to understand how forensic techniques can unravel complex data breach scenarios and support your insurance decisions.
Arthur Williamson graduated with a degree in Business and Management at the University of California, Berkeley. He is knowledgeable about what small and big businesses require to keep operations moving.
