Q. What is Cyber Liability Insurance and do I need it?
A. People have heard of the Target Hack. You may be thinking, well my business isn’t that big or my credit card vendor will cover such a breach. You are wrong. Cyber Liability a category of insurance protection that is needed by every business that uses any sort of electronic database system, takes credit cards, or facilitates any type of electronic transaction using customer information. People often believe that their credit card processing vendor offers them protection, and in some cases they may offer some small form of coverage. During a breach is the victim going to sue you or the credit card processing company. They are going to sue you. Cyber Liability can help pay the court fees and defense, whether you subrogate to the credit card processing company is up to you, but at least you are not out all of the court and lawyer fees.
State and federal laws impose daunting obligations on businesses in the event of a data breach whether by accident, hacker, or other causation. Data breach has a very broad definition, and even something like a stack of papers bound for the shredder truck in the parking lot getting blown away by the wind is considered a data breach. Letters of notification and credit monitoring services are often required by law not only for the customers who are suspected to have had their records exposed, but for all customers (active and inactive) in the database that was involved. The number one source of data breach in the United States is the disgruntled employee who sells customer data to an unauthorized source.
Here is a great article on What Makes Florida’s New Data Breach Law Unique. To briefly summarize the new law when a data breach occurs the targeted business has less time to notify customers and the definition of “sensitive information” has been expanded. What that means for you is that you will need additional resources to comply with the law in case of a breach, let cyber liability insurance be that helping hand.