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

Businesses in Vermont that experience a breach of security must notify all affected individuals no later than 45 days after its discovery. The state Attorney General must also be notified within 14 days.

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?

Vermont state law defines personally identifiable information as 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, taxpayer identification number, passport number, military identification card number, or other government-issued identification number
  • Financial 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
  • Biometric data
  • Genetic information
  • Health records and wellness records
  • A health care professional's medical diagnosis or treatment information
  • Health insurance policy number

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, but not later than 45 days after the discovery."

What are Vermont's data breach notification requirements?

Vermont's Security Breach Notice Act outlines when and how businesses need to respond to a security breach. Breaches of security must be reported when they are believed to have compromised the personal information of residents.

Businesses must report a breach to affected residents "in the most expedient time possible and without unreasonable delay, but not later than 45 days after the discovery." Delays may be permitted only upon request by a law enforcement agency.

The Vermont Attorney General or the Department of Financial Regulation, if applicable, must be notified within 14 business days. For breaches that affect more than 1,000 individuals, the business must also notify all nationwide consumer reporting agencies (TransUnion, Equifax, etc.).

Permitted methods of notifying residents include by mail, by email, and by telephone. A substitute notice is allowed when notification costs would exceed $10,000 or if the business doesn't have sufficient contact information. The substitute notice should consist of a conspicuous posting on the business's website, and notification of major statewide and regional media.

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

Data breach notices sent to Vermont residents should be "clear and conspicuous" and include:

  • A description of the incident in general terms
  • The type of personal information involved
  • The approximate date of the security breach
  • Any actions taken to prevent further security breaches
  • A telephone number, toll-free if available, that residents can call for information and assistance
  • Advice to remain vigilant by reviewing account statements and monitoring free credit reports

Notifications sent to the Attorney General or the Department of Financial Regulation should include:

  • The date of the security breach
  • The date of discovery of the breach
  • A description of the breach
  • The number of Vermont residents affected
  • A copy of the notice provided to residents

Notices sent to consumer reporting agencies should 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. However, as Vermont state law requires notification within 45 days of the discovery of a breach, businesses will be obligated to follow that deadline instead.

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 VT?

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 and State's Attorney can investigate potential violations of the state's data breach laws and enforce remedies upon businesses. The Department of Financial Regulation can do the same for businesses that are licensed or registered with the Department.

How can businesses prevent data breaches?

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

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 Vermont'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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