Data Compromise – How Would Your Customers React if their Personal Data is Breached?
An Emerging Risk
Today, all businesses collect and store personal information about customers, employees, and others. And data compromise — the theft, loss, or mistaken release of private information — is on the rise.
Data Compromise Insurance is designed to help small and mid-sized businesses notify and assist their clients and others following a breach of personal identifying information. It covers the cost of notifying clients, employees and others affected by the breach and provides specialized services such as credit monitoring and identity restoration that help businesses retain their clients’ and employees’ trust and good will following a breach.
Data Compromise coverage covers the expense to respond to a data breach and includes services to assist a business’ clients, employees, and others affected by the breach. These include:
- Legal review of notification obligations.
- Help to find who was affected by the breach and how to notify them.
- Preparation of notification letters.
- Toll-free help line.
- Credit monitoring for affected persons.
- Identity restoration case management for identity theft victims.
Client Relationships — Clients may terminate their relationship with a business that does not promptly notify and assist customers impacted by a data breach. One study reported that almost 60 percent of clients ended or considered ending their relationships with businesses that experienced a data breach.
Notification Costs — Costs of investigating the breach, notifying clients, employees, and other individuals, and providing assistance services can add up quickly, especially when a business has hundreds or thousands of clients.
Lost Productivity — When an unprepared business experiences a data breach confusion reigns. The time and effort expended to investigate the breach, notify, and respond to concerned customers can be a significant distraction to business owners and staff.
Damage to Reputation — A business whose reputation is tarnished because it experienced a data breach may find it more difficult to acquire new customers.