With the proliferation of data breaches, The Harford insurance company is selling a new data loss insurance aimed at small businesses that might be put at financial risk if they lose valuable and sensitive data.
The new coverage is an add-on to the company's existing Spectrum business-owner policy. It covers legal liability expenses and offers resources for policy holders to comply with regulatory requirements.
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Other insurers offer data breach coverage, which is becoming more common as data breaches increase and along with it the cost of dealing with the aftermath. A Ponemon survey last year put the average cost of data breaches at $7.2 million.
QUIZ: The data breach quiz
More than 40 states have laws that spell out what businesses are required to do when they lose sensitive data and also sets penalties if the requirements aren't met.
The Hartford's policy pays the cost of responding to a breach, including legal and forensic measures. It also pays for notifying those whose data was affected, crisis management and the cost of advertising breaches.
It also covers legal defense and liability such as civil awards, settlements, and judgments policy holders are legally obligated to pay.
Part of the coverage includes access to a website on being prepared for breaches. This offers advice about protecting customer, patient, and employee personal information and mapping out a plan for responding to incidents. It also provides a state-by-state library of data-breach regulatory requirements.
The policies also include consulting to help with notifying appropriate parties about breaches and obtaining credit-monitoring services for people whose data was compromised and are in danger of identity theft and fraud.
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