Why Your Ecommerce Shop May Need Data Breach Insurance?

What is a Data Breach in Ecommerce?

Do you know how it feels when your credit card is stolen, and someone goes on a shopping spree? Or how about the feeling of finding out that your email inbox has been hacked and some stranger knows everything about you? Well, that’s exactly what could happen if your ecommerce business experiences a data breach.

Ecommerce businesses collect and store a significant amount of sensitive personal information from customers, including names, addresses, and credit card information. Unfortunately, this makes you a prime target for fraudsters and cybercriminals looking to steal this information for their own gain. Common types of data breaches include hacking and phishing, which can have devastating consequences for an ecommerce business.

What are the Consequences of a Data Breach?

The consequences of a data breach can be high, including costs associated with notification and credit monitoring services, legal fees, and public relations damage. But the impact on your business is not limited to these tangible consequences.

You will likely not see many of these effects until long after the initial incident. Even if you pay for incident response and crisis management services out-of-pocket to limit your liability or recover as quickly as possible from this kind of event, there are still lasting effects that are difficult to undo. That’s where data breach insurance comes in to help.

How Does Data Breach Insurance Help?

Data breach insurance is a specialized form of coverage that helps ecommerce businesses manage the costs associated with notifying impacted customers, investigating the breach, and any legal fees that may result. It also provides coverage for credit monitoring services and identity theft protection.

Data breach insurance will cover all reasonably necessary expenses related to managing the aftermath of a cyber attack—from hiring forensic accountants and lawyers to paying for notification letters and credit monitoring services. It’s one more way to protect yourself from cyberattacks by adding another layer of protection in case your business is compromised.

Is that the Same as Cyber Attack Liability Insurance?

Data breach insurance is a different type of coverage. It covers the data breach’s costs, including legal issues and credit monitoring services.

Cyber liability insurance policies are more common in larger businesses because they’re required by some states to have them.

The differences tend to be with the insurance provider. This is still a relatively young area of insurance, and many companies are struggling to outline their specific coverage. You always want to read the fine print of what you will be getting. Your business may be open to different attacks depending on what you sell, your target market, and so many other factors.

Why Isn’t Traditional Insurance Enough?

You may not be aware of this, but most insurance policies don’t cover data breaches. Yeah, you heard that right—if your company experiences a security breach and has to pay out of pocket to rectify the situation, then that cost isn’t covered by standard insurance.

It’s not all doom and gloom though. Data breach insurance policies are designed specifically for businesses to help them recover from data breaches in addition to covering specific expenses related to the incident (such as legal fees).

Additionally, having data breach insurance can give small business owners peace of mind, knowing that their business is protected in the event of a cyber attack.

What are the Benefits of Data Breach Insurance?

If you’re looking for a way to protect your business from the aftershocks of a data breach, data breach insurance can be a lifesaver. Here’s why:

• It helps you recover from a breach by reimbursing expenses and providing legal defence in the event of litigation by customers or government agencies.
• It helps prevent future breaches by covering costs related to security improvements and employee training.
• It protects against potential liability claims if someone else steals your customer’s personal information (e.g., credit card numbers) and uses it for nefarious purposes (e.g., buying fake IDs).
• There are fines associated with failing to properly secure customer information, and these can cost thousands, even tens of thousands depending on how many people were affected by the breach.

What Other Ways Can I Boost My Online Store’s Security?

You need to approach ecommerce security like a multilayered onion or cake. Carefully crafting redundancies and automated systems to ensure no matter who tries to break into your online store’s sensitive information, there is a backup system in place to block their efforts.

That is why our team at OPMC has created a robust Anti-Fraud Plugin for WooCommerce. This assigns a numerical value to every transaction and carefully blocks IPs, potentially dangerous geographic areas, and notifies you of any risks so you can take proactive actions. It is a great way to lower the risk of DDoS attacks or fraudsters hoping to steal your client’s information, as well as many of the common frauds that can cost you thousands in fees.

Conclusion

Whether your ecommerce business has been hacked or you simply want to protect yourself from potential future cyber attacks, it’s important to understand the risks involved with data breaches and what kind of coverage is available. Data breach insurance policies provide coverage for costs associated with notification efforts, credit monitoring, legal fees and more, but only if you have the right approach in place.

There is never a 100% way to stop all potential threats to your online business, but that doesn’t mean you cannot do your best to lower that risk as much as possible. Visit our store at OPMC and explore our various automated WooCommerce plugins to boost your ecommerce security, fraud protection, and more. This way, when an attack does come, you are well prepared.