Small Businesses Should Consider Breach Insurance

If you have a small business, there’s a new insurance policy I recommend to protect you in the event of a data breach.

Why small businesses need breach insurance

We hear so much about the big companies in the news with data breaches — Sony, Target, Home Depot, the various health insurance companies — but we don’t often hear about small businesses.

When big retailers like those guys suffer a data breach they also potentially suffer a loss in business. People tend to punish the retailer when there’s a big breach.

Yet a new CreditCards.com survey finds the younger you are as a shopper, the less bothered you are by these breaches. Females in general tend to be less bothered than these breaches by males. I’m not sure why that is…

But here’s the thing: I think it’s particularly important to know the retailers — whether you’re talking about Target, Home Depot, Sony, or anybody else — are not at fault with these data breaches. The blame lies with the banks.

After all, it’s the banks that have stayed stuck with 1960s era magnetic-strip technology on credit cards. That old tech is so easy for criminals the world over to breach. That’s why international criminals have targeted our shores.

When the new chip and PIN system for credit cards is fully rolled out, that will go a long way to addressing our vulnerability as a nation.

That’s the big guys. But what if you own your own business? Can you handle a breach that could wipe out your accounts? Of course not.

That’s why I’m recommending that you take a look at breach insurance if you own a small business.

Let me preface this by saying this stuff is not cheap. It can cost a couple thousand dollars a year, according to USA Today. But I think it’s well worth it, particularly if you are very heavily data dependent in your business.

You can get a quote from your business line agent or broker. If they don’t write the policy, they can refer you out to someone who does.

Another way to limit — but not eliminate the threat of breach — is to do more in the cloud. Check out my recent discussion of free payroll and HR services in the cloud.

Remember, if you work hard — like all small business owners do — you don’t want to risk insolvency in the event of a data breach.