Small business insurance and Data Breach Liability

Business insurance is about protecting your livelihood, your hard work, and your dreams of success. So much of what we do in our businesses is done using technology. Technology allows us to handle payroll, track clients, follow sales progress, schedule production and more. With cloud technology, many small businesses no longer keep in-house systems or systems managers to handle the computing. The data storage is outsourced. Out sourcing allows for greater access via smart phones, tablets, and laptops. The office is virtual, and connected from just about anywhere for greater productivity. Therein lies the problem.

Your data may seem mundane to you. Nevertheless, it is a gold mine for nefarious people. Your clients’ names, payment options like bank accounts and credit cards, your employees’ social Security numbers, bank accounts for direct deposits, addresses, phone numbers, and vital statistics are open to data breach. Names and passwords for login accounts are subject of interest to internet criminals.

A data breach occurs when you proprietary and sensitive information (account data) is released from the system without your consent or knowledge. It can be trade secrets, patentable knowledge, personally identifiable information, or customer data. Think of how much of your personal information your dentist office has on you! The healthcare is the dominant industry in the US and growing. With the requirements of EMR (Electronic medical Records), the healthcare industry is struggling with how to stay protected.

Causes of data breaches can range from disgruntled employees running a spear phishing campaign. Spear phishing is when a person sends an email with credible enough information to one or a few intended targets like the account execs or network administrator. The email has an embedded worm or Trojan that will collect the information. Alternatively, the email may direct the person to enter critical data like security passwords and login keys, giving the perpetrator free access to the system.

Average cost to secure or repair each compromised record is $225 per record and growing. How do you protect against this? When looking at vendors for your cloud-computing find out what their liability covers. Hold them to a high standard that will not cost you your reputation and your company. Consider adding to your insurance liability plan to protect yourself. Data breach insurance is a form of liability insurance. It can be bought as a separate policy or attached as a rider to your present small business insurances.

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