With technological advancement, the inherent risk of a data breach has increased tremendously and has become more challenging to resolve. To tackle the threat posed by the data breach, appropriate data breach insurance coverage is the need of the hour. The use of continuous internet connection by businesses due to online interactions has made them more vulnerable to cyber-attacks. Hence the best way to protect the vital data is by having a secure data breach insurance policy.
Data breach insurance helps cover the costs of a data security breach for identity protection, public relations, legal fees, and liability depending on the coverage that a business adopts. Also, the data breach coverage helps to take quick action to restore the public’s confidence.
This policy provides access to professional assistance to help businesses comply with the required laws and regulations and also mitigate the risk of civil litigation and other penalties when a data breach occurs.
Who should get a data breach insurance policy?
- Businesses who continuously send and receive documents electronically
- Firms that carry out online promotion via social media and other websites should have a professional indemnity insurance
- Enterprises communicate with customers via emails, text, and social media on a regular basis
- Businesses with massive data stored on their computers
- Having critical data such as customer information, accounting records, tax documents, trade secrets, and much more
- Data belonging to other parties such as customers or service providers or vendors should be secured with the help of a professional indemnity insurance
- Online companies selling services and products
What does data breach insurance cover?
- First-party liability: It covers the following losses sustained by a business:
- Legal and forensic service expenses, which includes the costs involved in any investigation related to the breach of records
- Crisis management and notification expenses, which consists of the expenses involved in informing customers of the violation to their records as well as other response management costs
- Good faith advertising expenses, which includes the costs involved in ad campaigns to announce the breach to your records
- Third-party liability, which covers the business’s liability to its customers
It includes all the expenses combined, resulting from lawsuits from customers, as well as the cost of any other legal actions taken against the affected company.
How does data breach insurance help?
So, data breach coverage under professional indemnity insurance, provide businesses with expert advice that ensures:
- The company complies with all the regulatory requirements
- The business is suitably guided on preventing a data breach
- The firm can handle any breach in the data if it occurs in the future
The data breach insurance pays for the following expenses:
- Help the business to find who the breach affected and ways to notify them
- Affected individual’s credit monitoring
- Identity restoration case management for the victims of identity theft
- Carries the legal review of notification obligations
- The cost involved in the preparation of the notification letters
- Toll-free helpline
Renuka Shah, an employee of a financial services company, was attending a conference in Bengaluru on behalf of her employer. During her stay at the conference, someone stole her laptop.
The personal information for the clients including their social security numbers was stored on that laptop, and hence Renuka immediately contacts her employer to report the theft.
Renuka thought that since the laptop was password-protected, her clients’ personal information will not be at risk. Unfortunately, the data stored was never ‘encrypted’ by her.
Ultimately the data breach took place, and after receiving a report of the alleged theft, Renuka’s employer immediately contacted their insurance company to report this incidence of a data breach.
Fortunately, they had recently purchased data breach insurance coverage, and after gathering facts about the incident, the insurance company’s representative contacted the forensic services to investigate the loss. Triggered the following services:
- Investigating the loss which included the use of forensic services
- Providing counseling services to the company on data breach
- Mailing the notification letters to breach victims
- Providing credit monitoring services for the breach victims
The insurance company covered the cost of 2, 80,000 rupees for notification expenses and credit monitoring services. It also covered the forensic expenses of 50,000 rupees.