What are the data breach notification laws in Alaska?

A data breach is the unauthorized access or release of someone's personally identifiable information (PII), which is any data that could reveal an individual's identity.

Data breaches can happen if an employee clicks on a link in a phishing email, if a laptop or thumb drive is stolen, or if hackers break into an online account. Accidental security breaches are another cause, such as misconfigured software that leaves data unprotected.

Every small business that handles credit cards or stores customer information is vulnerable to data breaches. IT consultants, healthcare providers, and financial institutions are among the industries with the highest risk.

The Alaska Personal Information Protection Act defines personal information as the combination of an individual's name and one or more of the following:

• Social Security number
• Driver's license number or state identification card number
• Financial account number, credit card number, or debit card number
• Password or other means of access to an account

Any business that handles PII should invest in cyber liability insurance to mitigate costs in the event of a breach.

Alaska businesses that experience a data breach involving personal information must respond "in the most expeditious time possible and without unreasonable delay." The business can take time to determine the scope of the breach and restore the integrity of the information system.

Notification can be delayed if it would interfere with a criminal investigation by a law enforcement agency, or if the breach is unlikely to cause identity theft or other harm. The latter must be documented in writing and maintained for five years.

Alaska businesses that experience a data breach must notify any state residents whose private information was compromised. Businesses with 10 or fewer employees may be exempt from notice requirements.

The notice should be given in writing. Electronic mail is permitted if it's been the business's primary means of communication with the resident.

If more than 1,000 Alaska residents were affected, then the business must also notify consumer reporting agencies (TransUnion, Equifax, etc.).

Data breaches that impact healthcare facilities and healthcare professionals are regulated by federal laws. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) includes a Breach Notification Rule that requires notification after a breach of unsecured protected health information. Businesses must notify:

• Affected individuals
• The Secretary of Health and Human Services
• The media, if over 500 residents of a state or jurisdiction were affected

Individuals must be notified by first-class mail, or by email if they've agreed to electronic communication, within 60 days of the discovery of a breach.

The cost of a data breach can be significant, which is why cyber insurance is so important for businesses that handle personal data.

Notifying those affected and paying for credit monitoring can be expensive. You’ll have to investigate and fix your security weaknesses while suffering a possible loss of income, and government fines can also be costly. You might even face a ransomware attack, where hackers shut down your computer systems and demand payment.

Small businesses most often need first-party cyber liability insurance. Also called data breach insurance, this policy provides financial protection against data breaches at your business.

You can often add this coverage to your general liability insurance or business owner’s policy (BOP), which combines general liability coverage with commercial property insurance at a discount.

If you're responsible for another company's data security, then you may need third-party cyber liability insurance. This policy covers legal expenses when a client blames your business for failing to prevent a data breach at their company.

Because most tech businesses need this coverage, it's usually included with their errors and omissions insurance (E&O) in a bundle called tech E&O.

E&O insurance, also called professional liability insurance, covers your legal costs in the event that a client sues you for making a mistake or failing to deliver on a contract. Tech E&O extends that coverage to include lawsuits related to data breaches and cyberattacks.

While any business could be at risk of a lawsuit after a breach of security, this coverage is especially important for information technology businesses, especially IT consultants, network security companies, and cybersecurity businesses that recommend software or are responsible for information security.

Alaska businesses that fail to notify residents affected by a breach of the security of a system could face a civil penalty of up to $500 for each resident. The maximum penalty is $50,000.

For businesses that store data, it's crucial to take appropriate steps to prevent data breaches. Alaska's Personal Information Protection Act outlines permitted uses of an individual's Social Security number and other private information. For example, Social Security numbers can only be transmitted over a secure Internet connection or when encrypted.

Businesses are advised to safeguard personal information through a variety of methods, such as designating one or more employees to coordinate a security program. It’s a good idea to conduct a security audit of the various types of personal information, unique identifiers, and other data elements you might have in your data systems.

Requiring strong passwords, security questions, two-step authentication, and access codes can provide reasonable data protection for your business and any service providers who access this information, reducing the chance of an unauthorized acquisition.

Complete Insureon’s easy online application today to compare insurance quotes from top-rated insurance carriers for cyber policies. Our licensed agents will help you find coverage that fulfills Alaska's insurance requirements and protects your business. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.