Businesses in the Commonwealth of Virginia that experience a data breach must notify affected residents and the Office of the Attorney General if the breach is likely to result in identity theft or another type of fraud.
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.
Virginia state law defines personal information as an individual's first name or first initial and last name in combination with their:
Any business that handles PII should invest in cyber liability insurance to mitigate costs in the event of a breach.
Virginia businesses that experience a data breach must respond if the breach causes, or there is reasonable belief it may cause, identity theft or fraud to a resident.
Businesses must report a breach "without unreasonable delay" to the Office of the Attorney General and any residents whose personal information was compromised.
Notification may be delayed while the business determines the scope of the breach and restores its systems, or if a law enforcement agency determines that notification will impede its investigation of the breach.
For data breaches that affect more than 1,000 Virginia residents, businesses must also notify consumer reporting agencies (TransUnion, Equifax, etc.).
Notices to Virginia residents affected by a data breach can be sent via phone, email, or mail. They must include:
Consumer reporting agencies and the Office of the Attorney General must be informed of the timing, distribution, and content of the notice provided to residents.
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.
Additionally, Virginia law requires businesses to notify the Commissioner of Health of any breaches of medical information.
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.
Virginia businesses that fail to comply with the state's data breach notification laws could face a maximum civil penalty of $150,000 for each data breach, or for a series of breaches of a similar nature uncovered by a single investigation.
For businesses that store data, it's crucial to take appropriate steps to prevent data breaches. In fact, the Virginia Consumer Data Protection Act (VCDPA) requires reasonable data security practices for businesses that store personal data.
Businesses are advised to safeguard private information through a variety of methods, such as designating one or more employees to coordinate a 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 Virginia'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.