What are the data breach notification laws in Illinois?

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.

Illinois' Personal Information Protection Act (PIPA) defines personal information as knowing an individual's first name or first initial and last name in combination with any one or more of the following:

• Social Security number
• Driver's license number or state identification card number
• Financial account number, credit card number, or debit card number
• Medical information
• Health insurance information
• Unique biometric data, such as fingerprints

The term can also refer to a username or email address, in combination with the password or other information needed to access an online account. Publicly available information does not count as personal information.

Any business that handles PII should invest in cyber liability insurance to mitigate costs in the event of a data breach.

The state's Personal Information Protection Act outlines when and how businesses and other data collectors need to respond to a breach of security.

Illinois businesses that experience a data breach must respond when the personal information of a state resident was accessed, or believed to have been accessed, by an unauthorized person.

Businesses must report a breach "in the most expedient time possible and without unreasonable delay." Delays are permitted when law enforcement requests more time for a criminal investigation.

Illinois businesses that experience a data breach must notify any residents whose personal information was compromised. Both electronic notices and written notices are permitted.

If the number of Illinois residents affected is greater than 500, the business must also notify the Illinois Attorney General.

Notices to affected Illinois residents must include the contact information for consumer reporting agencies (e.g., Equifax, TransUnion) and the Federation Trade Commission. They should mention that these sources can provide information about fraud alerts and security freezes.

When a data breach exposes online account information, the notices should prompt residents to change their usernames, passwords, or security questions. These notices can be in the form of an email.

These notices should not disclose how many residents were affected by the breach.

For businesses that store or maintain personal information that they don't own, the owner of the data must be notified. These notifications should include the date of the breach, the scope of the breach, and any steps that the business has taken.

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:

• Affected individuals
• The United States Secretary of Health and Human Services
• The media, if over 500 residents of a state or jurisdiction were affected

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 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.

Violations of the Personal Information Protection Act are deemed an unlawful practice under the state's Consumer Fraud and Deceptive Business Practices Act.

Businesses that fail to provide notification of the breach could face severe penalties, including civil action suits and fines.

For businesses that store data, it's crucial to take appropriate steps to prevent data breaches. Businesses are advised to safeguard private information 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 protection for your business and any service providers who access this information, thereby reducing the chance of an unauthorized acquisition of data.

Complete Insureon’s easy online application today to compare quotes from top-rated insurance carriers for cyber policies. Our licensed agents will help you find coverage that fulfills Illinois' 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.