What is data compromise coverage?
Last updated: August 2021
Data compromise coverage is an optional coverage that may be added to a business insurance policy. This coverage, sometimes called data breach liability insurance, helps reimburse your business for certain expenses after a data breach. Some covered expenses may include:
- Informational materials for affected customers or employees
- Credit monitoring services for affected customers or employees
- Access to an identity theft help line if customer or employee information is stolen
- Your business's legal fees after a data breach
Data compromise coverage does not typically pay to restore your company's computers or systems affected by a data breach.
Do I need data compromise coverage for my business?
Most states now require companies to notify individuals if a data breach may have compromised their personal information, according to the Federal Trade Commission (FTC). Compromised information could include Social Security numbers, driver's license or passport numbers, financial information (such as account numbers) or digital signatures or passwords, says the nonprofit Privacy Rights Clearinghouse. Federal laws also require most institutions to notify individuals if their personal health information has been compromised, says the FTC.
If your business owners policy includes data compromise coverage, it may help pay for expenses related to notifying affected individuals after a data breach.
How can I help prevent a data breach at my business?
At many businesses, not all employees have business needs that require access to secure data. One way to help prevent a data breach. is to restrict employee access to sensitive customer or employee data, says the FTC. You may also want to consider safeguarding secure data with a password. Finally, implement a policy that requires employees to use strong computer passwords to make hacking more difficult for data thieves.
If a data breach occurs at your business despite your best efforts, data compromise coverage can help you respond to the crisis. To learn more about this coverage, and other coverage options available for your business, contact your insurance provider.