Cyber Liability Insurance

Is Your Small Business Ready for a Data Breach?

A data breach is a sudden event which occurs when personally identifiable information is compromised. Hackers, a faulty transaction, malfunctioning technology, simple human error and lost or improperly disposed data can be the culprit. If you collect personal information, consider what cyber liability insurance has to offer!

The effects of data breaches on your small business could be devastating. Not only will you be responsible for credit monitoring for anyone affected, but analysis into how the data breach occurred and steps to avoid another occurrence can be costly and time consuming.

Ponemon Institute studies data breaches. In 2013 this annual study estimated an average post-breach cost of $188 per record. Although this includes $124 in lost business cost, the remaining $64 of actual remediation cost per record can add up quickly.

Data breaches occur every day. Hacking incidents are the most recognizable and expensive cause of data loss, yet they are not the most common. Three out of four incidents result from human error!

40% of the data breach cases are from people making mistakes, such as losing laptops and flash drives.
36% are system glitches, such as software updates, which inadvertently expose sensitive private files.
24% are malicious and criminal attacks.Here are just a few examples of how a breach of information can occur and how much remediation would cost without proper coverage:

Cyber-liability policies may also provide coverage for liability claims for:

spreading a virus
spreading a malicious code
computer theft
extortion
unintentional act
mistakes
errors
omissions made by your employees while performing their jobs

Example Breach:

A restaurant experienced stolen personal identification credit card numbers on a hacked server.
Number of records: 1,800
Estimated costs at $64 per record = $115,200

Example Breach:

Retail store mistakenly dumped sensitive client information into garbage containers behind its facility. The records included credit card account numbers, names, addresses and telephone numbers of employees and customers.
Number of records: 4,000
Estimated costs at $64 per record = $256,000

Example Breach:

A laptop with employee information stolen out of a parked car.
Number of records: 4,300
Estimated costs at $64 per record = $275,200

Important statistics/facts your small business should know about

According to Visa, 85% of data breaches occur at the small business level
Shred-it, an information security company, found 41% of small business owners have no secure data protocols
“When we look back at the higher education data breaches in 2012, we can see that the hackers are clearly getting smarter at stealing data,” states Alex Rothacker, Director of Security Research, AppSecInc’s TeamSHATTER
Ponemon Institute reported the total cost per company from a data breach was more than $6.75 million
The HITECH Act and FTC requires you to notify your clients when the security of their health information has been breached; Health and Human Services requires HIPAA-covered entities, such as hospitals, doctors’ offices, and health insurance plans, to notify individuals of a security breach.