Your business has insurance for typical business risks, but will your insurance protect you from liability arising from privacy law compliance?
People are increasingly aware of their privacy rights. This heightened awareness has translated into a greater willingness to initiate costly and time-consuming privacy complaints. Thanks to laws like the Personal Information Protection and Electronic Documents Act (PIPEDA), the reality for businesses is that non-compliance with privacy laws can take a chunk out of the bottom line. Given the costs associated with failing to meet legal standards, it’s not surprising that many insurers now offer privacy insurance coverage. But what is privacy insurance, and will it actually protect your business when you need it most? The scope of coverage offered varies depending on the provider, so it’s important to read the fineprint.
Be sure to ask what the policy covers. Some policies limit privacy insurance to protection from hacker attacks. But while hackers are a serious issue for any business, your insurance plan may need to do more. Depending on your jurisdiction and the applicable privacy laws, you may want to look for protection against any costs that can be imposed by the regulatory agencies that oversee compliance with privacy legislation. Otherwise, you might find you’re on your own for your businesses’s failure to fully meet the legal requirements for personal information under your control, including obligations to respond to access to information requests, obtain consents and ensure the accuracy of personal information holdings. It’s also a good idea to evalute your existing protection. Your current business insurance may already provide you with the coverage you need. If, for example, your errors and omissions insurance already protects you against privacy breaches, purchasing additional insurance may not be necessary.
Consider what the privacy insurance plan won’t cover. Many plans don’t cover illegal or fraudulent employee conduct, and some stop short of protecting against anything beyond the unauthorized release of personal information. Court defence costs may also be excluded. Make sure you read the plan or have your lawyer go over it before you buy it.
Finally, don’t forget that the best insurance policy is to take as many proactive steps as possible to get your privacy house in order. If you’re reading this blog, chances are you already have some of these measures in place. If not, consider comprehensive privacy policies and procedures that are reviewed and updated on (at least) an annual basis by legal counsel with expertise in privacy law. Staff privacy training is another excellent proactive step. As the saying goes, the best offence is a good defence!
Posted by Brian Bowman 
