Businesses and large companies are at greater risk of having their data breached. Hence, it is essential for them to get an insurance policy that would help protect against data loss. Data breach insurance is best for incidents of unauthorized access and risk exposure to valuable data, which includes the physical theft of information that are not stored on the system.
Data breaches often pose a lot of risks to businesses when they are not properly insured. If you seek information about what data breach insurance covers and its exclusions, ensure you read to the end of this article.
What is Data Breach Insurance?
Data breach insurance is a type of liability coverage that helps companies cover the costs associated with cyber-related incidents and data breaches. It is different from cyber liability insurance that most people compare it with in the sense that cyber liability insurance only covers losses stemming from computer-related data breaches.
What Does Data Breach Insurance Cover?
Generally, data breach insurance offers coverage for first-party losses for a company that loses valuable data and other information. A data breach could result from the loss of a laptop, hacker attacks, physical theft, or information leaks.
It could also be caused by workers who abuse their privilege of sharing, copying, and using data without proper authorization from the company.
Most data breach insurance offers coverage for the following:
- Malware attacks
- Employee mistakes
- Data theft by employees
- Malfunctions
- Extortion
- Insider data breaches
- Phishing attacks
- Ransomware attacks
- Damage control from a public relations firm
- Consumer notification costs
To get the most coverage, reach out to your insurance company to provide you with the best options that guarantee your peace of mind and business stability. You can even shop around and compare prices and coverage options. This would help narrow down your choices and select the best offer.
What Does Data Breach Insurance Not Cover?
Although data breach insurance protects a company from a wide range of risks, there are exclusions, such as:
- Bodily injury or property damage.
- Employee harassment, discrimination, or wrongful termination.
- Professional mistakes or omissions.
In a situation where your business is liable for bodily injury or property damage, you can get coverage from your general liability insurance policy. But if you don’t, data breach insurance will not cover property damage or bodily injury.
How Much Does Data Breach Insurance Cost?
Typically, policyholders pay around $1,750 per year for premiums with $1 million in coverage. It also includes a deductible of $2,500. But it is imperative to know that if you select a high deductible, it will reduce your premium costs.
Nevertheless, there are other factors that can influence the cost of data breach insurance. When you finally make the decision to purchase data breach insurance, the cost will be dependent on the following factors:
- The number of customers you have.
- The type of sensitive data you store.
- Your claim history.
- The number of people that were affected.
- Your overall revenue.
- Regulatory fines and penalties.
- Cyberextortion demands.
- How long your business was interrupted due to the breach.
Aside from the factors mentioned above, your insurance company may also consider who has access to your data. If you own a company or you’re managing a business with many employees or third-party contractors, it is believed that you are at higher risk of facing a data breach or cybercrime.
In essence, the higher the number of people who have access to your data, the higher the level of risk you are exposed to.
How to Prevent a Data Breach
Having substantial knowledge of how to prevent data breaches is crucial. This would help you come up with efficient strategies to ensure that you don’t lose your valuable data to a third party.
One of the most essential things to consider is having a robust insurance policy that will protect you against any form of data breach. You can also implement the following strategies:
• Keep files locked
This is one of the most important ways to prevent a data breach. Ensure you keep all important files locked. You can have a file cabinet and drawers that have a lock system on it. By doing this, you can help limit the way others have access to personal and private data.
• Update your antivirus software
If you own a business that involves storing a wide range of personal information, it is important to choose the best antivirus software solutions that will help monitor your data for updates and patches. There are diverse antivirus software that can prevent hackers and thieves from accessing your data; you should get one.
• Train your employees
Training your workers on tips on how to prevent data breaches goes a long way. You can hold regular sessions and enlighten them on ways through which they can protect information and data that are important to the company.
The training sessions should include teaching them how to protect their emails and passwords, as well as better ways of storing data on their systems. Educate them on how to identify when a data breach is going to occur and how to avoid it.
• Develop security protocols
When you establish security protocols for third-party vendors or service technicians who work in your company, you will be able to prevent your data from getting breached.
Here’s what to do: limit their access to certain rooms where important data are stored. And if there’s an unavoidable situation where they have to work there, ensure you have someone who is watching over them.
• Have a backup
This is one of the best ways to prevent all your data from getting lost; having a backup plan brings relief and stability.
You can work with an IT professional who will help your business develop backup databases and operational systems that can be accessed if there is a breach in your data. This would enable you to continue with the daily operation of your business without interruption.
Above all, you can perform a cyber-security risk assessment that would help identify items or data storage that are vulnerable to data breaches.
