Since October is National Cyber Security Awareness Month, it’s only fitting that we write about Data Breach. We have all seen the headlines. Store after store having data breaches and their customers are left wondering if their information was stolen. I know I wondered on a few occasions if I was a victim. Even private pictures are at risk of being stolen and exploited. When a data breach occurs, a quick response is crucial to minimizing the damage to a business’s reputation. Data breach insurance can be the difference between a quick, organized response and a response which further erodes the public’s opinion. As we all know, with all the social media networks and media outlets out there, protecting your company's brand and reputation is vital.
While most business owners understand the value of having their business covered by business insurance, they do not always realize that there is an additional option that will further protect them in the event of a data breach. Due to recent breaches, awareness is up. According to Marsh, LLC, an insurance brokerage firm, one out of three companies has insurance to cover data breach losses. A recent study showed that 43% of companies have had some form of data breach in the past year, which means some businesses were left without coverage. Depending on the information stolen, the typical cost to the company in the event of a data breach is $120 - $300 per record stolen. Even for a small business, those numbers add up and can quickly become overwhelming.
Data breach insurance is specifically designed to address the needs of a business that has been attacked in order to gain access to personal information, it is handled by a team of professionals who can monitor the situation and determine how best to correct the company’s public image and provide resolution. This is done through prompt notification of the affected customers, monitoring the company’s public image, addressing any negative fallout immediately, and ensuring that any legal or liability issues which occur from the data breach are dealt with quickly and professionally. Insurance can even extend to monitoring the affected customers credit to ensure that they do not have issues due to the breach in the future.
As with any risk, prevention plays an important role. Preventing a data breach should be a priority of all business owners and risk managers. Some insurance companies also offer some services before a breach has even occurred. These services include making sure employees are aware of basic guidelines which can decrease the occurrence of a data breach via a preparedness website. The best mindset to have is, it’s not a matter of if a data breach will occur, but when.
If you have any questions regarding Data Breach Insurance or other Business Insurance coverages, please contact us today. Below are some resources that you might find helpful, including an application.