This year we have seen a huge increase in reported data breaches within corporate America. Large companies such as Target, Home Depot, P.F. Chang’s and Jimmy John’s have had their systems “hacked” and data stolen — causing millions of dollars of damage. While news channels focus on these attention-worthy sound bites, the real potential catastrophe remains under-reported and largely ignored.
Recent studies show that over 65 percent of all claims are from companies with fewer than 100 employees. This market segment is typically underinsured and unaware of the potential ramification of a data breach.
Millions of small businesses collect and process sensitive information on a daily basis. This information, such as medical and dental records, Social Security numbers and driver’s licenses, and credit cards used in everyday purchases, is stored electronically and subject to being stolen and used by criminals.
Sit back and think through your day– purchases made on a credit card, information given to prove your identity at banks, insurance agencies or medical offices, accessing of bank accounts from tablet or smart phones across unsecured networks. Then wonder at how this data is stored and protected. The average consumer conducts dozens of transactions daily and we rely on the security — or assumed security — of businesses. This assumption is wrong, as over 50 percent of small businesses have experienced at least one data breach in the past five years. Compounding this problem is the fact that most breaches are not reported or even identified for years.
Many small businesses rely on their business insurance policy to protect against damages arising from data breaches. This false sense of security is quickly dispelled at the first hint of a claim when the business owner learns the policy offers no coverage against the breach. This lack of knowledge stems from most business owners not clearly understanding what constitutes a data breach and what type of insurance needs to be purchased