Payment card industry (PCI) compliance is a set of standards mandated by credit card companies to ensure that businesses securely handle customer data. Pairing PCI compliance with cyber liability insurance is your company’s best line of defense against data breaches.
To properly protect credit card transactions and keep customers’ payment details confidential, most credit card companies mandate PCI DSS compliance, or payment card industry data security standard compliance, from any business, merchant, or financial institution that handles credit card payments.
Created and regulated by the PCI Security Standards Council (SSC), these PCI DSS standards are a crucial part of the payment security protocol for Visa, Mastercard, American Express, and many other credit card brands.
There are 12 PCI DSS compliance requirements:
The government doesn’t legally require businesses to be PCI compliant, but most payment processors and merchant service providers include it as a contractual obligation.
Failing to be PCI compliant can result in hefty penalties, including:
To understand the relationship between PCI compliance and insurance, consider the process of a child learning to ride a bike. They have training wheels to help keep them from falling off the bike, and a helmet to protect their head in case they do. These two components are not reliant upon each other, but they work together to provide the child with the most protection.
In business, PCI compliance is a crucial step in protecting customer information and reducing the chance of a data breach, and a cyber liability insurance policy is there to protect your business in case it gets hit with a cyberattack, helping to cover fines, legal fees, and recovery costs.
Sometimes you can wear a raincoat and still get soaked in a storm. That’s where cyber insurance comes in. If your PCI-compliant company suffers from a data breach, a cyber liability policy will help pay for recovery expenses, including:
If your company is non-PCI compliant, cyber insurance is highly recommended. Most policies will help cover the substantial regulatory fines, penalties, and assessments imposed by credit card companies and payment processors due to PCI DSS noncompliance.
Keep in mind, some insurance companies might exclude or limit coverage for PCI-related fines if they determine that your noncompliance was caused by negligence on your part. Be sure to carefully review your policy to understand the specific coverage you have for these events.
There are two types of cyber insurance coverage: first-party liability and third-party liability. To determine how much protection your business needs, it helps to understand the difference between the two.
If your business experiences a ransomware attack or data breach, first-party cyber coverage would assist with the recovery bills while you get things back up and running as smoothly as possible. Also known as data breach insurance, first-party liability helps with costs tied to:
If a client sues you for causing a data breach at their business, third-party cyber coverage comes in to handle costs for:
IT and tech companies should also consider tech E&O, a bundle that combines cyber insurance with errors and omissions insurance. This policy protects small IT businesses against legal fees tied to data breaches and other risks of working for clients.
It’s important to note that being a cyber insurance policyholder does not mean your business is PCI compliant. You must also vigilantly follow the SSC’s security requirements to prevent cybercriminals from attacking in the first place.
Adhering to PCI compliance requirements shows insurers that you’re committed to security. That means your business is low risk, which can lead to lower premiums, better coverage limits, and fewer exclusions.
If your business handles cardholder information in any way, you need to be PCI compliant. This applies to all companies that process, transmit, or store data from credit, debit, and prepaid cards.
Some of the businesses that typically fall into this category include:
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Insureon customers pay an average of $145 per month for cyber insurance. The cost of cyber liability insurance is based on several factors, including:
Additionally, the number of cybersecurity measures in place, including those that make your company PCI compliant, will play a role in determining your pricing.
Small businesses fall into four levels of PCI compliance, based on the total number of credit card transactions they process every year, with level one being the highest.
The higher the level, the stricter the PCI DSS requirements, which can include detailed documentation, cybersecurity audits, and regular pen testing. To make sure you’re implementing the right security protocols, you need to know which level your company is at:
PCI compliance isn’t something you achieve and then cross off your to-do list. As part of your risk management strategy, staying PCI DSS compliant requires a continuous commitment to cybersecurity protocols and standards.
These are some of the key steps you can take to uphold PCI compliance:
Pen testing, also called ethical hacking, is when authorized cybersecurity experts simulate cyberattacks on your systems to uncover any vulnerabilities.
According to the SSC, your business should conduct penetration testing at least once a year, plus every time your system infrastructure or software gets modified or upgraded. This ensures that all safety levers you already have in place are still working after the update.
Here are a few tips for conducting a successful penetration test:
Get free cyber insurance quotes from top-rated insurance providers by filling out our easy online application. You can also speak with a licensed insurance agent, who can answer questions and help you find affordable coverage.
Once you find the right policies for your small business, you can begin coverage and get a certificate of insurance (COI) in less than 24 hours.
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