Imagine what would happen if someone hacked into your computer system? Or an employee absent-mindedly left his laptop at the airport? Or a file cabinet’s worth of medical records was accidentally left on the curb instead of shredded? Or a rogue employee decided they wanted to peruse the personnel records of their colleagues?

Such incidents constitute a data breach because they result in sensitive information in the hands of the wrong people. When a data breach occurs, there is a ripple effect that begins with the hassle of notifying those whose security was compromised and carries over into long-lasting damage to a company’s reputation and potential loss of business. In most instances, a company is required by law to take action or face potential civil litigation and other penalties.

Naturally, some businesses have more reason to be concerned than others – those who routinely keep sensitive client or patient data on file, for example. But if you think you could never fall prey to a data breach, simply because your company doesn’t maintain such information, you’d better think again. Most any client, customer, or employee data can be vulnerable – credit/debit card information, social security numbers, dates of birth, drivers’ license numbers, or email addresses. If you do something as simple as conduct employee background checks as a routine part of your recruiting process, chances are good you have sensitive information on file.

It’s not just the Fortune 500 who need worry either. Out of 760 data breaches analyzed in 2010, two-thirds involved businesses with fewer than 100 employees, according to Verizon Business. As a result, a number of insurance carriers, including The Hartford, have expanded their portfolios of cyber risk coverage to include data breach coverage designed specifically for small businesses.

The Hartford’s coverage provides coverage for expenses and legal liability resulting from a data breach. It also provides access to services to help business owners address customer concerns and comply with regulatory requirements. The Hartford’s data breach coverage includes first party coverage, which covers costs incurred by the company when responding to state-mandated actions, as well as PR activity necessary to preserve brand and reputation. This includes legal and forensic services, notification expenses, crisis management, and good faith advertising expenses.

The Hartford’s offering also includes third-party insurance coverage, which covers defense and liability-related costs incurred as a result of the data breach. These include civil awards, settlements, or judgments, as well as any legal costs the company incurs in the course of defending itself.

Finally, The Hartford’s data breach coverage provides access to a secure “breach preparedness” web site featuring easy-to-understand tips and guidelines to help your company mitigate the chances of suffering a data breach in the first place.

For more information on data breach coverage or answers to any other risk-related questions, contact The Foley Insurance Group. We have the knowledge and experience to help you make the right decisions to protect your business.