According to state law, businesses in Connecticut that experience a data breach must notify affected residents and the Office of the Attorney General within 60 days of its discovery.
A data breach is the unauthorized access or release of someone's personally identifiable information (PII), which is any data that could reveal an individual's identity.
Data breaches can happen if an employee clicks on a link in a phishing email, if a laptop or thumb drive is stolen, or if hackers break into a computer network. Accidental security breaches are another cause, such as misconfigured software that leaves data unprotected.
Every small business that handles credit cards or stores customer information is vulnerable to data breaches. IT consultants, healthcare providers, and financial institutions are among the industries with the highest risk.
Connecticut state law [PDF] defines personal information as knowing an individual's first name or first initial and last name in combination with one or more of the following:
Any business that handles PII should invest in cyber liability insurance to mitigate costs in the event of a data breach.
Connecticut state law outlines when and how businesses need to respond to a security breach. Breaches of security must be reported when they are believed to have compromised the personal information of residents.
Businesses must report a breach "without unreasonable delay and no later than 60 days from discovery of the breach." Delays may be permitted only when notification would interfere with a law enforcement agency's criminal investigation.
Connecticut businesses that experience a data breach must notify any residents whose personal information was compromised, as well as the Office of the Attorney General. Permitted methods include written notices, notification by telephone, and notification by email.
Data breach notices sent to Connecticut residents typically include the business’s name and contact information, the type of information that was compromised, and a general description of the breach.
For data breaches that affect online accounts, the business must direct residents how to protect their account by changing their password or taking other security measures. For breaches involving Social Security numbers or taxpayer identification numbers, residents must be offered two years of free identity theft prevention or mitigation services.
To notify the Connecticut Attorney General, businesses must use the online Data Breach Report Submission Form. The form includes the name and address of the business, the number of people affected, the date of the breach, the scope of the breach, the personal information involved, and other relevant details.
Data breaches that impact healthcare facilities and healthcare professionals are regulated by federal laws. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) includes a Breach Notification Rule that requires notification after a breach of unsecured protected health information. Businesses must notify:
Under HIPAA, individuals must be notified by first-class mail, or by email if they've agreed to electronic communication, within 60 days of the discovery of a breach.
The cost of a data breach can be significant, which is why cyber liability insurance is so important for businesses that handle personal data.
Notifying those affected and paying for credit monitoring can be expensive. You’ll have to investigate and fix your security weaknesses while suffering a possible loss of income, and government fines can also be costly. You might even face a ransomware attack, where hackers shut down your computer systems and demand payment.
Small businesses most often need first-party cyber liability insurance. Also called data breach insurance, this policy provides financial protection against data breaches at your business.
You can often add this coverage to your general liability insurance or business owner’s policy (BOP), which combines general liability coverage with commercial property insurance at a discount.
If you're responsible for another company's data security, then you may need third-party cyber liability insurance. This policy covers legal expenses when a client blames your business for failing to prevent a data breach at their company.
Because most tech businesses need this coverage, it's usually included with their errors and omissions insurance (E&O) in a bundle called tech E&O.
E&O insurance, also called professional liability insurance, covers your legal costs in the event that a client sues you for making a mistake or failing to deliver on a contract. Tech E&O extends that coverage to include lawsuits related to data breaches and cyberattacks.
While any business could be at risk of a lawsuit after a data breach, this coverage is especially important for information technology businesses, especially IT consultants, network security companies, and cybersecurity businesses that recommend software or are responsible for information security.
Cyber liability insurance can be an affordable option for small businesses looking for data breach protection. Several factors affect the cost of a cyber liability policy, including:
All of these factors will be instrumental in determining how much cyber liability insurance your small business needs.
Failure to provide notice of a security breach is a violation of the Connecticut Unfair Trade Practices Act (CUTPA). Courts can award damages and impose civil penalties of up to $5,000, among other actions and penalties.
For businesses that store data, it's crucial to take appropriate steps to prevent data breaches. In fact, Connecticut's Data Privacy Law [PDF] requires businesses to implement and maintain reasonable security procedures and practices to protect personal information.
Businesses are advised to safeguard PII through a variety of methods, such as designating one or more employees to coordinate a security program. It’s a good idea to conduct a security audit of the various types of personal information, unique identifiers, and other data elements you might have in your data systems.
Requiring strong passwords, security questions, two-step authentication, and access codes can provide reasonable data protection for your business and any service providers who access this information, reducing the chance of an unauthorized acquisition.
Complete Insureon’s easy online application today to compare insurance quotes from top-rated insurance carriers for cyber policies. Our licensed agents will help you find coverage that fulfills Connecticut's insurance requirements and protects your business. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.