What Is Data Loss Insurance?

A 202 data protection survey from Rewind found one in four retailers surveyed have permanently lost critical business data, leading to decreased sales and revenue for their businesses. The most significant causes included human error, cyber attacks, and third-party applications.

To keep business operations running, investing in cyber insurance coverage can help an organization get back on its feet by providing financial protection against data breaches and other forms of data loss. In the event of a ransomware attack, some first-party insurance policies cover investigation costs, lost revenue, and the price of repair for hardware and software for your company.

What Is Data Insurance And What Does It Cover?

Data breach insurance typically provides first-party coverages for losses linked to an information breach, hack, or other theft of company information. Insurance policies can cover expenses related to informing customers and other affected parties impacted by the breach, and providing resources such as credit monitoring and assistance hotlines.

Types of Incidents That Are Covered

Data breach coverage protection is usually limited to protection against first-party costs. Depending on the type of data breach policy you choose to purchase for your company, different breaches may be covered under specific guidelines. Some of these costs can include:

• Cyber extortion: Some policies cover the cost of fees associated with ransomware attacks where you need to pay third parties in order to access your data
• Data breach analysis: Companies may also need to pay for security measures such as any forensic fees to identify and resolve the cause of a breach
• Other business costs : The process of of restoring any data lost due to a cyberattack, including other business interruption expenses oss or restoration assets on your computer system
• Client notification: If customer information is lost, informing data breach victims is a legal requirement in most states.
• Credit monitoring: This coverage allows your business to provide credit monitoring to those whose customer data may have been stolen in a data breach.
• Public relations: In some cases, policies can shoulder the financial burden of hiring a public relations team to minimize reputation damage for a company

What Does Data Loss Insurance Not Cover?

Some coverage exclusions typically include those linked to criminal acts, breaches of contract, property damage, and employment practices:

• Deliberate action by an IT staff member to delete business files
• Failure of an company to meet Gramm Leach Bliley Act security rule requirements for student financial aid data protection and breaches linked to this
• Failure of a third-party and/or cloud vendor to protect any data entrusted to it

For these reasons, companies need to be careful review any contracts before signing. This is due to the fact that the terms and coverage provided in cyber-liability insurance policies may vary widely across states and price points.

How Much Does Data Loss Insurance Cost?

The price of coverage can vary depending on the financial assistance you require. This depends on the size of our company, annual revenue, and coverage requirements. Typically, this ranges somewhere between $650 to $120,000 annually.

As a general rule, it is better to choose a policy with broad coverages that addresses risk as effectively as possible. During a worst case scenario, being prepared help you can navigate the extensive costs surrounding privacy violations and data breaches. 

Overall costs can depend on a variety of factors including:

• Coverage limits: Higher limits come at a higher price point compared to lower coverage limits
• Data access: The number of users who access your software can increase the risk involved, such as third-parties who do website maintenance as opposed to in-house employees
• Level of network security: Risks can go up if you store information on networks that aren't fully secured, so installing antivirus, having company firewalls, and strong passwords can protect your business from computer attacks, and electronic extortion
• Type of procession: Accountains, medical offices, and IT companies are more vulnerable to the loss of customer data, leading to higher premiums
• Claims history: If you have had software breaches in the past, companies are likely to charge higher premiums as you are more susceptible to a future breach

Frequently Asked Questions

Should I Buy Cyber Insurance?

Buying cyber insurance for your business can give you the peace of mind when it comes to the loss of sensitive data and the financial costs associated with this. By choosing the right policy for your business, you'll be able to file claims in the event of a data breach, which can be worth the initial investment as cybersecurity incidents increase in sophistication and frequency online.

Who Is Liable in a Data Breach?

Typically, the data owners, namely the firm or organization that is storing data is responsible for any data breaches that occur and will have to pay any legal fines or fees out of pocket unless they are covered by an insurance policy. Even if the security failures are the fault of a third-party cloud provider, the data owners may be held liable for any customer information that has been lost.

How Do I Make A Claim with Data Loss Insurance?

According to a guide on data breaches from the FTC, the first step that businesses should take during a breach is to inform law enforcement, other affected businesses, and affected individuals. In addition, you should contact your insurance company as soon as possible and provide the necessary documentation regarding the information that has been lost during the breach.

What Is the Difference Between Cyber Insurance and Data Breach Insurance?

While cyber liability insurance coversboth monetary losses from a breach and provides legal protection, data breach insurance is only limited to your financial interest. For businesses that store personally identifiable data on their own servers, cyber liability insurance provides broader coverage.

However a business doesn't store data on on their own networks but can still be held responsible for data loss from third parties, would benefit most from data breach insurance.

Although data breach insurance can be a suitable safety net for a business that suffers from a cybersecurity or privacy-related loss, it may not be prudent to rely solely on your insurance plan when an incident occurs. It should be used to support regularly updated security policies and practices in your company. 

If you're having trouble deciding on the type of data loss insurance or cyber insurance you should purchase for your business, contact us today at Assured Standard for a comparison of the best options for your brand.