Data Breach Insurance

What is data breach insurance?

Data breach coverage is a type of cyber insurance that protects small businesses from expenses related to compromised data. A data breach insurance policy can help manage losses related to the personal identifiable information (PII) or personal health information (PHI) of customers, clients, or employees.

You can make a data breach insurance claim regardless of how the data was compromised, including cyber attacks, physical theft, employee negligence, or intentional misuse.

Why is data breach insurance important?

Data breach insurance is important because it helps prevent expensive losses and ensures a quicker return to normal operations following a cybersecurity incident. It also gives your company reputational support as you resolve claims.

Without insurance, you could pay out of pocket for data recovery, legal fees, credit monitoring services, settlements, and more. Data breach coverage helps you manage these costs and protect your company's financial stability.

Data breach insurance for small businesses also protects you from liabilities associated with the compromise, loss, or theft of data, no matter how or where it occurs. As these incidents become more common, having the right coverage is essential for risk management.

Explore cyber security tips for protecting your small business's data.

Who needs data breach insurance?

Any company that collects, stores, or processes sensitive information should consider data breach insurance coverage. In particular, it's a good fit for businesses that:

• Handle customers' personal identifiable information: Online retailers, accounting firms, and other businesses that collect customer names, addresses, credit card numbers, and more might need data breach insurance.
• Manage personal health information: Medical offices, chiropractors, mental health counselors, and physical therapists store private patient information that they're responsible for protecting.
• Operate in technology fields: IT and other technology businesses that handle cybersecurity, network security, software and app development, and web hosting typically benefit from data breach insurance coverage.

What types of data breaches are covered?

Several types of intentional or accidental data breaches and cyber incidents can be covered by a data breach insurance policy, including:

• Malware attacks: Software written to damage computer systems that leads to unauthorized access to sensitive data.
• Ransomware attacks: Software that encrypts files or locks computer systems, then demands payment in exchange for restoring access.
• Malfunctions: Technical failures or errors within computer systems that result in unintended data exposure, loss, or corruption.
• Phishing attacks: Techniques used to trick individuals into providing sensitive information through email or social media.
• Insider data breaches: Unauthorized access or leaking of confidential information by individuals within your organization.
• Employee mistakes: Human errors or negligence leading to accidental data breaches, like sending someone sensitive information or mistakenly sharing login credentials.
• Data theft by employees: Intentional or unintentional theft of confidential data by current or former employees.

Learn ways to protect your small business from cyber security threats.

How do I get data breach insurance?

There are several ways to get data breach insurance coverage. When deciding what's best for your business, consider:

• Purchasing a standalone policy: You can get data breach coverage with a dedicated cyber insurance policy.
• Adding a rider to an existing policy: Add data breach protection to your general liability insurance, business owners policy (BOP), or errors and omissions (E&O) insurance with a cyber insurance rider.

The right choice depends on specific features of your business and the types of breaches you're most concerned about. If you're unsure which option is the best fit, our insurance experts can offer advice.

How much does data breach insurance cost?

For most small businesses, cyber insurance rates depend on several cost factors, including:

• Data amount
• Data sensitivity
• Employees
• Business size
• Annual revenue
• Network security
• Claims history
• Policy limits

Insurers use these details to assess your level of risk and determine your data breach premium. For example, a company that handles sensitive information and allows many workers to access it can expect to pay more than a business that limits this type of data access to fewer employees.

What is not covered by data breach insurance?

Data breach insurance typically excludes data loss related to the following events:

• Prior acts or knowledge: Data breach claims you had knowledge of prior to the policy period starting.
• Accidental damage: Physical damage to a network or storage device that results in a data loss.
• Natural occurrences: Network or service lapses caused by fire, wind, and similar events.

Review your policy documents to see what terms and conditions apply. You can also discuss any questions with your insurance provider to understand what is and isn't covered under your data breach insurance policy.

Protect your small business from data breaches

Data breach insurance offers a safety net for businesses and their customers in the digital age. As cyber threats evolve, carriers adapt coverage to the changing landscape.

Get the protection you need with a cyber policy quote online, or speak with an agent to find the data breach insurance coverage that's right for your business.