Data Breach Insurance in Maine
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What are the data breach notification laws in Maine?

According to state law, businesses in Maine that experience a data breach must notify affected residents "as expediently as possible and without unreasonable delay." Notices can be written or electronic, and must be submitted within 30 days after the discovery of the breach.

What is a data breach?

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 consumer information is vulnerable to data breaches. IT consultants, healthcare providers, and financial institutions are among the industries with the highest risk of harm.

What is personally identifiable information?

Maine's data breach notification law defines personal information as an individual's first name or first initial and last name linked to any one or more of the following data elements that relate to the person:

  • Social Security number
  • Driver’s license number or state identification card number
  • Account number, credit card number, or debit card number, if such a number could be used without additional identifying information, access codes or passwords
  • Account passwords or personal identification numbers or other access codes

This also includes the data elements above when not connected with a resident’s name, if the information would be sufficient to permit a person to fraudulently assume the identity of the resident whose information was compromised.

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

Businesses in Maine must report a breach to all affected residents "as expediently as possible and without unreasonable delay," and no more than 30 days after the scope of the breach is determined.

What are Maine's data breach notification requirements?

Maine state law outlines notice requirements for when and how businesses need to respond in the event of a breach.

Breaches of security must be reported immediately after their discovery when they are believed to have compromised the personal information of Maine residents, unless identity theft or other types of harm are unlikely.

Businesses must report a breach to all affected residents "as expediently as possible and without unreasonable delay," and no more than 30 days after the scope of the breach is determined. Delays are permitted when law enforcement requests more time for a criminal investigation.

Communication to residents may be provided via written notice or electronic notice. Substitute notice is allowed if a business demonstrates that the cost of providing notice would exceed $5,000, or the affected number of individuals to be notified exceeds 1,000, or if the business entity does not have sufficient contact information to satisfy the required notice.

If any individuals need to be notified, businesses must notify the Department of Professional and Financial Regulation or the Maine Attorney General, if not otherwise regulated by the Department. If more than 1,000 Maine residents were affected, then the business must also notify the nationwide consumer reporting agencies (TransUnion, Equifax, etc.).

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What do business owners need to include in a data breach notice?

While Maine law does not have specific requirements for the content of the notices sent to residents, they typically include the contact information for the business, which personal information was impacted, and contact information for the nationwide consumer reporting agencies (e.g., Equifax, TransUnion).

The notices should mention that these sources can provide information about fraud alerts and security freezes. When a data breach exposes online account information, they should prompt residents to change their usernames, passwords, or security questions.

The reporting form sent to the Department of Professional and Financial Regulation or the Attorney General’s office must include:

  • Business name and contact information
  • Total number of people affected
  • Date that the breach occurred
  • Type of personal data involved
  • A description of the breach

Breaches of health information are regulated on the federal level

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

Under HIPAA, affected persons 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. However, as Maine state law requires notification with 30 days of the discovery of a breach, businesses will be obligated to follow that deadline instead.

Protect your business with cyber liability insurance

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.

Businesses that recommend software need additional protection

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.

How much does cyber liability insurance cost in ME?

Businessperson calculating the cost of cyber liability insurance.

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:

  • Amount of sensitive data handled
  • Your industry
  • Coverage limits
  • Number of employees

All of these factors will be instrumental in determining how much cyber liability insurance your small business needs.

What are the penalties for not giving notice of a data breach?

Failure to provide notice of a security breach is a violation of Maine's security breach notification statute and may result in civil penalties or other remedies.

This may include a fine of $500 per violation, up to $2,500 for each day the business is in violation; equitable relief, or enjoinment from further violations.

How can businesses prevent data breaches?

For businesses that store data, it's crucial to take appropriate steps to prevent a breach of the security of the system that you use to house personal information. Businesses should implement and maintain a reasonable security policy and procedures to protect personal information.

A variety of methods can be used to safeguard PII, 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.

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 acquisition of personal information by an unauthorized person.

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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 Maine'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.

Updated: August 9, 2022
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