The impact of data breaches on SMBs can be catastrophic. According to statistics, 60% of small companies close within 6 months of being hacked. Much of the reason for this stark number comes from the fact that these companies cannot afford the costs associated with the breach. These costs would have been covered by data breach insurance.
“Protecting data needs to be a top priority for all businesses, and investing in insurance is a key aspect.” – Jason Harlam, Business Development Manager, Technology Advisory Group.
Getting insurance against data breaches simply makes sense. Most executives wouldn’t dream of not having other forms of insurance that cover other aspects of their business. Your digital assets must be treated with the same weight.
The biggest reason why many businesses lack cyber coverage is because leadership is unaware of the option. That’s why this article will discuss data breach insurance, what it covers, and when the costs are worth the investment.
What Does Data Breach Insurance Cover?
Data breach insurance covers the costs and services associated with responding to a data breach. Businesses use data breach coverage to mitigate the financial impact of a data breach. Here is a list of examples of these costs.
| Notification Costs | Covers the expense of notifying affected customers and stakeholders. |
| Credit Monitoring | Provides credit monitoring services to individuals whose data was exposed. |
| Forensic Investigation | Pays for forensic experts to identify the cause and scope of the breach. |
| Public Relations | Manages the company’s public image and communication post-breach. |
| Regulatory Fines | Covers fines imposed by regulatory bodies specifically due to the breach. |
| Data Restoration | Covers the cost of restoring or recovering lost data. |
What’s The Difference Between Data Breach Insurance & Cyber Liability Insurance?
The main difference is that data breach insurance covers the direct costs related to security breaches, while cyber liability insurance offers broader coverage, including indirect consequences and additional cyber threats.
Direct breach costs include notifying affected individuals, providing credit monitoring services, conducting forensic investigations, and handling public relations efforts. The broader scope of cyber liability insurance includes third-party lawsuits, legal expenses, and revenue loss from related business interruptions.
Data Breaches Expose More than 22 Billion Records in 1 YearDon’t become another statistic. Get ahead of cyber threats with proactive protection. |
Is Data Breach Insurance Required?
Data breach insurance is not legally required, but it is highly recommended for businesses that handle sensitive or personal information. Some compliance bodies may require insurance, but this is not a government mandate.
However, the cost of responding to a data breach can be up to $4.88 million. Therefore, having business insurance that can cover the bulk of those costs is a wise investment. Your insurance premiums are unlikely to exceed the cost of responding to an uninsured breach.
When Should You Consider Investing in Data Breach Insurance?
Any business that holds valuable data should consider insurance. However, there are certain instances when it’s especially crucial. Here are some examples.
1. You Handle Personal Information
Personal data refers to both employee and customer information. Examples may include names, addresses, or social security numbers. This type of information is highly sought after by cyber criminals so having it stored on your systems makes you a bigger target, no matter your business size.
2. You Store Payment Information
Businesses that save credit card information or other payment details are prime targets for cybercriminals. Data breach insurance is essential for covering the costs associated with a potential breach.
3. You Operate in a Regulated Industry
Any industry that must follow compliance requirements may be subject to regulatory fines if a breach occurs. Due to this additional cost, responding to breaches without insurance could be even more expensive than it would be for others.
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4. You Heavily Rely on Digital Systems
If your business depends on computers, software, and the internet to run daily tasks, you are more vulnerable to cyber attacks. This is simply because your employees spend more time around potential entry points. Since 95% of breaches are a direct result of human error, it’s vital to be insured against this potential threat.
5. You Have Limited IT Security Resources
CloudSecureTech points out that 78% of businesses worldwide are facing a tech talent shortage. The problem is that having limited resources makes your business more susceptible to breaches. Therefore, insurance is more worth the investment.
6. You Are Experiencing Rapid Growth
When your business is growing quickly, your systems and security measures may not consistently keep up with the expansion. This can create weak spots that hackers can exploit. Data breach insurance can help protect your business during this time by covering the costs associated with any breaches if they occur as you expand.
| Find Data Security Experts in Rhode Island | |
| Providence | Worcester |
Reduce Your Risk Profile by Outsourcing to TAG’s Cybersecurity Experts
Like other types of insurance, you can reduce the cost of data breach insurance by lowering your risk profile. What you need to do will vary based on your insurance provider. However, in most cases, having an outsourced team of cybersecurity experts will help.
You can find those experts from the Technology Advisory Group. We already protect over 1,500 network endpoints across Rhode Island and we’d happily add yours to our list. Our experts can keep an eye on your systems to prevent data breaches and help you navigate your response if one occurs.
Reach out to us today to get started.
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