Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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data privacy insurance

Is data privacy insurance necessary? The simple answer and only answer is yes. In our contemporary digital age, not having data privacy insurance is leaving yourself open to host of cyber induced trouble and significant costs associated with security breaches and potential failure to comply with state and federal policies regarding client or patient privacy of information.

Statistics indicate that approximately one in every three American households has been a victim of a white collar crime, and that U.S. organizations have inured damages and losses of more than $400 billion annually due to white collar crimes.

Whether you are a small or large business, data privacy insurance is a worthy and necessary investment. Although premiums might seem intimidating at first, you can not afford not to pay them. You can find affordable insurance when you enter your ZIP code in our FREE comparison tool.

What Primary Services Does a Data Privacy Insurance Company Provide?

A data privacy insurance company offers its clients a multi-faceted type of protection that covers expenses caused by data security privacy breaches, which can include penalties and fees associated with not enforcing state or federal policies or notification laws.

If a breach occurs, a data privacy company can help the organization or institution to comply with data breach notification

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laws. Currently 46 states require businesses to inform their consumers in the case of lost or stolen information.

Data privacy insurance also helps the organization or institution secure legal counsel and hires forensic experts to investigate and deal with a information privacy breach. If a third party claim arises regarding privacy, network security or internet media, a data privacy insurance company can also provide liability coverage.

Generally, services of a data privacy insurance can also be tailored to provide services that deal with pertinent cyber issues such as cyber liability. Clients of the organization who are victims are also helped by data privacy insurance as they are entitles to credit file monitoring services.

Finally, a data privacy insurance company will continually help an organization administer government-mandated identity theft prevention programs.

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State and Federal Regulations for Privacy

Privacy is a right of every U.S. citizen and it is of the utmost importance for institutions which have access to an individual’s private information or records to exercise the utmost care in protecting it and keeping that information safe.

In large industries, such as the healthcare industry, there are federal and state regulations like HIPAA and HITECH regulations, that ensure that a patient’s sensitive and highly private information is gathered and stored that way, with the highest consideration to their privacy.

Failure to adhere to these policies or breaches in data privacy result in heavy fines and/or penalties for the institutions where privacy statutes are not followed.

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Specialized Services

Data insurance companies are specifically geared to cater to the needs of different industries, for example, the healthcare industry, and provide coverage for legal costs in responding to regulatory proceedings, or paying for the penalties or fines that are assessed.

One data privacy insurance company is the MMIC which is based in Minneapolis and which enables clients that range from small doctor’s offices to large hospitals to respond immediately in the event of a privacy breach to minimize damage to both the institution and the patient and to mitigate exposure to legal liability.

In other similarly information sensitive industries, like the banking industry, data privacy is nationally regulated as well and therefore data privacy insurance is critical as the slightest breach of information or an uncontainable leak can cost billions and cause a bank to loose a significant number of clients. Enter your ZIP code in our FREE comparison tool

Who is Part of a Data Privacy Insurance Company?

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Data privacy insurance companies are comprised of a highly qualified team of individuals which specialize in different fields to provide holistic services to prevent the loss of data, and rapid response to any breach or loss of data. These individuals can include but are not limited to:

  • Attorneys
  • Notification providers
  • Credit monitoring staff
  • Call center staff
  • Specialists like forensic experts to investigate a breach
  • Information technology experts

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What are Example of a Limit and Rates Coverage Option by a Data Privacy Insurance Company?

An example of a basic coverage plan per rate that is extended by a data privacy insurance company, the Princeton Insurance, catering to physicians in their private practice is:

  • Breach Notification, Credit Monitoring Costs $50,000
  • Third-Party Liability Coverage $50,000
  • Government Investigation Defense Coverage $25,000
  • Remediation Costs $5,000

Premiums for one physician and entity with an aggregate of all coverages that averages to $100,000 can start as low as $450, then increase per physician in the practice.

For example coverage for two or three physicians that averages $250,000 has a premium of $750, 4 physicians and entity with coverage of $250,000 has a premium of $1,250, coverage of 5 to 10 physicians and entity of $250,000 has a premium of $1,750, coverage of 11 to 19 physicians and entity for $500,000 has a premium of $2,500 and so on.

Cost vs. Benefit of Insurance

Having data privacy insurance is an added expense but saves exorbitant fees that are related to payment of regulatory defense and penalties that result from privacy violations.

It not only keeps an organization or business in line with state and national laws but serves the best interests of the institutions itself and their clients.

It ensures a longevity of operation, consumer confidence, organizational profits and productivity and peace of mind regarding the safety of the most sensitive and private of information the organization is entrusted by the public with. Enter your ZIP code in our comparison tool now to compare FREE car insurance quotes.