In the state of Massachusetts, even data breaches that affect only one resident must be disclosed to the affected individual and state offices.
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 an online account. 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.
Massachusetts state law defines personal information as an individual's first name and last 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 breach.
Massachusetts businesses that experience a data breach must respond when the personal information of Massachusetts residents was acquired, or believed to have been acquired, by an unauthorized person.
The breach must be reported "within a reasonable amount of time after either the discovery of a breach or knowledge that personal information was obtained."
Massachusetts businesses that experience a data breach must notify any residents whose personal information was compromised. They must also notify the Office of Consumer Affairs and Business Regulation and the Massachusetts Attorney General’s Office.
If a resident's Social Security number was compromised, then the business must provide them with at least 18 months of free credit monitoring services.
Massachusetts reports a much higher number of breaches than most other states, due to the fact that even breaches that affect a single resident must be disclosed.
Notifications to affected Massachusetts residents must include:
The notice should not include the nature of the breach or the number of residents who were affected.
Notifications submitted to the Office of Consumer Affairs and Business Regulation and the Attorney General’s Office must include:
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:
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.
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.
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 breach of security, 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.
Massachusetts businesses that fail to comply with the state's Standards for the Protection of Personal Information of Residents of the Commonwealth could face a penalty of $5,000 for each violation.
It's crucial to take appropriate steps to prevent data breaches. In fact, Massachusetts law requires security precautions for businesses that handle residents' personal information.
Businesses are advised to safeguard private information through a variety of methods, such as designating one or more employees to coordinate an information 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 Massachusetts' 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.