When it comes to what property insurance covers, leaks of information of a sensitive nature is not one of those. General Liability insurance sounds like it would cover this, right? Wrong. General Liability is only for bodily injury and property damage, not cybersecurity issues. Regardless of the type of industry your business is in, you most likely store private information. Unfortunately, in this day and age, it is at risk. Hackers from all over the world are stealing this private information and using it for their selfish gain. Data Breach insurance is a type of insurance policy that was developed to help cover the risk associated with storing privileged information. The costs associated with a data breach can be devastating, sometimes bankrupting businesses that have not purchased a Data Breach insurance policy. You probably have heard of Cyber Liability insurance, but Data Breach is just a part of the Cyber Liability realm.
If you have data that you store, such as customer or vendor information, that is sensitive, and it is leaked, Data Breach insurance will pay for the costs associated with it. There are two main types of coverage within this policy - first and third party. First party, which is for your business, will include things like:
There will be more coverages than this, but each policy is different so be sure to do your research. Third party coverage will be there if someone sues you for the breach.
First and foremost, you need Data Breach insurance to keep your business running. You not only don't want to worry about the cost but also the time it will take to repair the damage associated with one. Additionally, it can make your business look good over others to customers to see that you are taking the right steps to protect their information adequately.
It is essential to consider Data Breach coverage as part of your Cyber Liability insurance when moving your business online. Doing business online comes with several advantages, however, there are also additional risks that can lead to massive damages to your business and reputation. Therefore, you should review your insurance policies periodically, especially after a change in your business model, and make sure you are covered with the right insurance.
Any business that collects online data is eligible for this insurance policy. Your Data Breach coverage needs might change based on the amount of data you collect on a daily basis, the systems you use to collect it, the amount of time you keep it, and the extent to which you use it. This involves internal as well as external or third-party data.
Data Breach liability is a portion of Cyber Liability insurance and is often purchased together in a bundle. However, Cyber Liability is for when your business is accused of causing harm to an outside party, such as if you unintentionally send a virus causing damage to another company.
It is difficult to pinpoint a number that will be adequate for your unique situation. Best case scenario, you have an amount that will protect you if there is a Data Breach. Possibly researching some claims that have occurred within your industry will help to give you an idea. At the very least, the standard limits seen are usually between $1 and $3 million. You will want to determine how much personal information you have stored and then work with an experienced licensed insurance agent to identify your best options.