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

According to state law, businesses in Minnesota that experience a data breach must notify affected residents "in the most expedient time possible and without unreasonable delay." Notices can be written or electronic, and must be submitted as soon as possible after discovery of the breach.

What is a data breach?

A data breach is the unauthorized acquisition 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?

Minnesota'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:

  • Social Security number
  • Driver’s license number or Minnesota identification card number
  • An individual's financial account number, credit card number, or debit card number in combination with a security code or password that grants access to the account

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 to affected residents "in the most expedient time possible and without unreasonable delay."

What are Minnesota's data breach notification requirements?

Minnesota Statutes outline 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 Minnesota residents, unless identity theft or other types of harm are unlikely.

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

Communication to residents may be provided via written notice or electronic notice, such as an email notice. A substitute notice is allowed if the business demonstrates that the cost of providing notice would exceed $250,000, the affected number of individuals to be notified exceeds 500,000, or the business entity does not have sufficient contact information to satisfy the required notice.

If more than 500 Minnesota residents were affected, then the business must also notify the nationwide consumer reporting agencies (TransUnion, Equifax, etc.) within 48 hours of notifying affected individuals.

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

The Minnesota Department of Administration recommends that notices sent to Minnesota residents include:

  • Your business's name and contact information
  • A description of the data breach
  • The types of personal information compromised
  • Recommendations for additional action, such as information about free credit reports, fraud alerts, and security freezes

Reports to nationwide consumer agencies must include the timing, distribution, and content of the notices sent to residents.

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.

Protect your business with cyber insurance

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.

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 insurance cost in MN?

A small business owner calculating their cyber liability costs

Cyber 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?

The Attorney General is responsible for enforcing penalties to violators of Minnesota's data breach notification law.

Failure to provide notice of a security breach to Minnesota residents may result in civil penalties or other remedies.

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.

A variety of methods can be used, such as designating one or more employees to coordinate a security program for consumer protection. It’s a good idea to conduct an 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 use this information, reducing the chance of an unauthorized person gaining access.

Get quotes from trusted carriers with Insureon

Complete Insureon’s easy online application today to compare quotes for cyber liability insurance and other policies from top-rated insurance carriers. Our licensed agents will help you find coverage that fulfills Minnesota'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: March 5, 2024
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