What are the data breach notification laws in Hawaii?

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 a computer network. 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.

Hawaii's data breach notification law defines personal information as an individual's first name or first initial and last name, phone number, or address, and any one of the following:

• Social Security number
• Driver’s license number or Hawaii identification card number
• Account number, credit or debit card number, access code, or password that would permit access to an individual’s financial account

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

Hawaii state law outlines notice requirements for when and how businesses need to respond to a security breach.

Breaches of security must be reported immediately following the discovery of the breach when they are believed to have compromised the personal information of Hawaiian residents, unless identity theft or other types of harm are unlikely.

Businesses must report a breach to all affected residents "without unreasonable delay, consistent with the legitimate needs of law enforcement... and consistent with any measures necessary to determine sufficient contact information, determine the scope of the breach, and restore the reasonable integrity, security, and confidentiality of the data system."

Businesses may provide communication to residents via written notice, telephonic notice, or electronic notice. Substitute notice is allowed if a business demonstrates that the cost of providing notice would exceed $100,000, if the affected number of individuals to be notified exceeds 200,000, or if the business entity does not have sufficient contact information to satisfy the required notice.

If more than 1,000 individuals have been affected, businesses must also notify Hawaii’s Office of Consumer Protection and all nationwide consumer reporting agencies.

Security breach notifications sent to Hawaii residents must include the following:

• A description of the breach incident, in general terms
• A description of the types of information that were subject to the breach
• Actions taken by the business to protect the personal information from further unauthorized access
• A statement explaining the right to obtain a free security freeze and how to request it
• A telephone number and other contact information that affected individuals can use for further information and assistance
• Advice that directs the person to remain vigilant by reviewing account statements and monitoring free credit reports (provided by the business)

To notify the Hawaii Office of Consumer Protection and nationwide consumer reporting agencies, businesses must submit a notification of the breach with the following:

• The nature of the breach
• The number of individuals affected by the breach
• A copy of the security breach notice that was issued
• A statement of whether the notice was delayed due to law enforcement considerations
• Any procedures that have been implemented to prevent the breach from reoccurring

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

Under HIPAA, affected persons 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 data breach, 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.

Failure to provide notice of a security breach is a violation of Hawaii's Security Breach of Personal Information Act. Businesses may be subject to penalties to the State of Hawaii of not more than $2,500 for each violation, as brought on through civil action by the state Attorney General.

In addition, any business that violates these provisions shall be liable to an injured party an amount equal to the sum of any actual damages sustained.

For businesses that store data, it's crucial to take appropriate steps to prevent data breaches. In fact, Hawaii law requires businesses to implement and maintain reasonable security safeguards to protect personal information.

Businesses are advised to safeguard PII 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 disclosure or acquisition of personal information.

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 Hawaii'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.