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

Businesses in South Carolina that experience a breach of security must notify all affected residents when there is risk of harm. Notices can be sent via writing, email, or telephone.

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?

South Carolina state law 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 or state identification card number
  • Financial account number, credit card number, or debit card number in combination with a security code or other means of access to a resident's financial account
  • Other numbers or information which may be used to access a person's financial account
  • Other numbers or information issued by a governmental or regulatory entity that uniquely identifies an individual

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, consistent with the legitimate needs of law enforcement."

What are South Carolina's security breach notification requirements?

South Carolina state law outlines when and how businesses need to respond to a security breach. Breaches of security must be reported when an unauthorized person is likely to have acquired a resident's personal information, and illegal use of the information has occurred or is likely to occur.

Businesses must report a breach to affected residents "in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, or with measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system." Delays may be permitted only when notification would interfere with a law enforcement agency's criminal investigation.

Permitted methods include written notice, telephone notice, and electronic notice. A substitute notice is allowed when notification costs would exceed $250,000, over 500,000 people were affected, or if the business doesn't have sufficient contact information. The substitute notice should consist of emails, a conspicuous posting on the business's website, and notification of major statewide media.

For breaches that affect more than 1,000 people, the business must also notify the Consumer Protection Division of the Department of Consumer Affairs and all consumer reporting agencies that compile and maintain files on a nationwide basis (e.g., TransUnion, Equifax).

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

Data breach notices for affected residents typically include the business’s name and contact information, the type of information that was compromised, and the date of the breach.

In the event of a breach involving online accounts, the business should direct residents to change their password or take other security measures to prevent an unauthorized person from gaining access.

Notices to credit reporting 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, 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.

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 SC?

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?

South Carolina has strict penalties for businesses that fail to disclose a breach of the security of the system when residents are affected. For knowing and willful violations, businesses can be fined $1,000 for each affected resident.

Injured residents may bring a civil action to recover damages from both willful and negligent violations, seek an injunction to enforce compliance, and recover attorney's fees and court costs, if successful. Civil actions for negligent violations are limited to actual damages.

How can businesses prevent data breaches?

For businesses that store data, it's crucial to take appropriate steps to prevent data breaches and subsequent identity theft.

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 South Carolina'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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