Lawsuits over data loss and security breaches are becoming more common. Obtaining insurance to cover losses from data loss can potentially save your business. Business litigation attorneys bringing lawsuits over data losses often include negligence as one of the grounds or theories of recovery in these cases. Take for example, the recent class action lawsuit for data loss filed against Aetna in Federal Court in Pennsylvania. The lead theory of recovery in the complaint against Aetna is negligence.
There may be many reasons why attorneys pursue negligence as a theory of recovery in these security and privacy cases. However, pursuing a negligence theory increases the possibility of triggering the breaching company’s insurance coverage for data loss, if the company has a policy. If a business has insurance coverage that applies to the allegations in the complaint, the insurance company typically will also provide a legal defense to the claim. Legal costs alone could be enough to sink a business, let alone the damages.
When considering the cost of a data loss insurance policy, a business owner should likewise consider the cost to the business of a data breach. How can you estimate the cost? One way to estimate the cost is to use a data loss calculator. You might also estimate your data loss costs by referencing this 2009 Ponemon Institute benchmark study estimating costs at $202 per page and rising.
The price of an insurance policy may be cost effective when you consider the potential devastating financial impact of a major data loss or security breach. In addition, if a business has a strong data loss policy and procedure in place, the cost of insurance should be lower. Although cyber liability insurance has been available for over ten years, more of these insurance policies are being offered at better prices today. Here are some links to major insurance companies offering insurance policies for data loss, cyber liability, and technology errors.