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

Businesses in Rhode Island that experience a breach of security must notify all affected individuals within 45 days of 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 customer information is vulnerable to data breaches. IT consultants, healthcare providers, and financial institutions are among the industries with the highest risk.

What is personally identifiable information?

The Rhode Island Identity Theft Protection Act of 2015 defines personal information as knowing an individual's first name or first initial and last name in combination with one or more of the following data elements:

  • Social Security number
  • Driver's license number, state identification card number, or tribal identification number
  • Account number, credit card number, or debit card number in combination with a password or other means of access to an individual's financial account
  • Medical or health insurance information
  • E-mail address in combination with a password or other means of access to an individual's personal, medical, insurance, or financial 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, but no later than 45 calendar days after confirmation of the breach."

What are Rhode Island's data breach notification requirements?

Rhode Island state law outlines data breach notice requirements for businesses. Breaches of security must be reported when they are believed to have compromised the personal information of residents and there is a significant risk of identity theft.

Businesses must report a breach to affected residents "in the most expedient time possible, but no later than 45 calendar days after confirmation of the breach." Delays may be permitted only when notification would interfere with a law enforcement agency's criminal investigation.

When a data breach affects more than 500 residents, the business must also notify the Attorney General and the major consumer reporting agencies.

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

Data breach notices sent to Rhode Island residents must include the following, to the extent possible:

  • A description of the incident, including how it occurred and how many individuals were affected
  • The type of information involved
  • The date the breach occurred
  • The date the breach was discovered
  • A concise description of any remediation services offered to affected individuals, including toll-free numbers and websites for the credit reporting agencies (and notice that they may require a fee), remediation service providers, and the Attorney General
  • Directions on how to file or obtain a police report
  • Directions on how to obtain a security freeze

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, 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. However, Rhode Island businesses must comply with the state's law that allows 45 days to give notice.

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 RI?

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?

Each reckless violation of Rhode Island's data breach notification laws is considered a civil violation with a maximum penalty of $100 per record. The maximum civil penalty increases to a maximum of $200 per record for "knowing and willful" violations.

The Attorney General may bring an action in the name of the state against a business for a violation, if proceedings would be in the public interest.

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.

Businesses are advised to safeguard PII through a variety of security measures, such as designating one or more employees to coordinate a security program. It’s a good idea to conduct an audit of the personal information and unique identifiers you store in your data systems.

Strong passwords, security questions, two-step authentication, and access codes can provide reasonable data protection for your business, reducing the chance of an unauthorized acquisition of electronic files.

Get quotes from trusted carriers with Insureon

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 Rhode Island'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 4, 2024
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