According to state law, businesses in Delaware that experience a data breach must notify affected residents within 60 days of its discovery, unless a shorter timeframe is required by federal law.
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.
Delaware's security breach notification law defines personal information as knowing a resident'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.
Businesses must report a breach "without unreasonable delay but not later than 60 days after determination of the breach of security."
Delaware law outlines when and how businesses need to respond to a security breach.
Businesses that experience a data breach must promptly investigate the likelihood that personal information will be misused. Residents must be notified as soon as possible if misuse occurred, or is reasonably likely to occur.
Businesses must report a breach "without unreasonable delay but not later than 60 days after determination of the breach of security." Notification obligations can be delayed only when they would interfere with a criminal investigation by law enforcement, or when it takes longer for a business to discover that personal information was compromised.
Notifications may need to be provided in a shorter time frame if they are required sooner by federal law.
Delaware businesses that experience a data breach must notify any affected Delaware residents whose personal information was compromised. Permitted methods include written notices, notification by telephone, and electronic notice, such as email.
For data breaches that affect 500 or more residents, the business must also notify the Office of the Attorney General.
Delaware law does not require a specific form of notice to alert residents that their personal information has been subject to a security breach. However, the Consumer Protection Unit of the Delaware Department of Justice offers a model form [PDF] to provide businesses with guidance of what to include in a data breach notification.
Through this form, they recommend that businesses include the following information in their notice to affected residents:
To notify the Delaware Attorney General, businesses must use the online Data Breach Notification Form. The form includes the name and address of the business, the number of people affected, the date of the breach, how residents were informed, and other relevant details.
If the breached data includes the Social Security numbers of residents, the business must provide them with credit monitoring services for at least one year, unless an investigation reveals that the breach was unlikely to cause identity theft or other harm.
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.
The state Attorney General may impose "appropriate damages and penalties" for failure to follow security breach notice requirements.
Private actions are permitted by individuals, with a cap of triple the damages plus costs and legal fees.
For businesses that store data, it's crucial to take appropriate steps to prevent data breaches. In fact, Delaware's state data breach law 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 Delaware'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.