On September 7th, Equifax announced a data breach that may affect 143 million consumers. Security experts are saying it could be one of the worst data breaches ever. Congress will hold hearings. Attorneys General will launch investigations to levy fines and penalties. The public demands action.
As a small business owner, it’s easy to watch the news and think that a breach could never happen to your business – you don’t store sensitive information and you definitely don’t have 143,000,000 records to worry about. However, many small businesses keep the following records that contain sensitive data that, when lost or stolen, could amount to a data breach:
- Employee files containing full name, social security number, current and past addresses.
- Contractor files containing full name and tax ID, usually social security number or FEIN.
- Vendor files with banking details to facilitate payments
- Credit cards on file from loyal customers who prefer to not provide the details at every purchase
Data breaches most often occur from human error and not from the mysterious computer hackers you read about in the news. Examples include improper disposal of records, a lost device with unencrypted data, or even verbally disclosing sensitive data to an unauthorized third party.
The average cost of a data breach is approximately $35,000 for firms with less than 100 employees according to Hiscox, one of the world’s leading data breach insurers. That cost does not include the reputational damage inflicted upon a business that’s had a breach. The attorney fees, notification costs, credit monitoring, and any applicable regulatory fines can add up quickly.
A small business can protect itself by putting processes in place to prevent a breach from happening in the first place but then also having a comprehensive plan to respond when one occurs. A business should consider purchasing data breach insurance as a way to fund their response. Many insurers offer a 24/7 hotline for policyholders to call if they suspect a breach has occurred. The hotline is staffed with breach response experts who will help you along the way.
There is no standard data breach insurance product available in the marketplace. As an independent agent, United Insurance works with many different insurers to negotiate cover terms and to find the right value for our clients. Please give us a call today to discuss your data breach coverage needs.
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