From Charleston to Greenville, South Carolina businesses are more connected than ever. But that also means they’re more exposed to cyber threats. Data breaches, phishing scams, and ransomware attacks are hitting businesses of all sizes—including small shops and professional offices.
While cyber liability insurance is not legally required in South Carolina, the state does have strong breach notification laws. If your business stores personal data and suffers a breach, you could face serious legal and financial consequences.
This guide breaks down who needs coverage, what it includes, what the law says, and how much protection costs.
Why Cyber Insurance Matters in South Carolina
There is no state law that forces South Carolina businesses to carry cyber liability insurance for all entities. But under S.C. Code § 39-1-90 (Business data, breach of security; notifications, definitions, penalties, and exceptions), if you own or license computerized data that includes personal identifying information and it gets breached, you must disclose that breach to affected South Carolina residents.
If more than 1,000 residents are affected at one time, you must also notify the Department of Consumer Affairs (specifically, the Consumer Protection Division) and all nationwide consumer reporting agencies.
Without a policy, your business could be responsible for all costs—legal fees, notification letters, IT investigations, lost income, and even lawsuits.
Who Needs Cyber Liability Coverage?
Any business that stores or processes personal, protected, or regulated information should strongly consider cyber insurance. This includes:
- Healthcare providers who must comply with HIPAA (get HIPAA breach insurance SC).
- Banks, credit unions, and advisors covered under GLBA. (Note: Financial organizations in compliance with GLBA are generally deemed to comply with S.C. Code § 39-1-90).
- Retailers and e-commerce shops that process credit card data under PCI DSS.
- Schools and colleges, often using outdated systems, which need ransomware protection.
- Service providers and government vendors with contract-based liability.
- Insurance Licensees: Are subject to the South Carolina Insurance Data Security Act (S.C. Code Title 38, Chapter 99), which became effective January 1, 2019 (with certain provisions phased in over time). This law requires them to implement and maintain a comprehensive information security program and to notify the Director of the Department of Insurance of certain cybersecurity events (e.g., within 72 hours if affecting 250 or more SC consumers and meeting specific criteria under Section 38-99-40 or if reasonably likely to materially harm a consumer or the licensee’s operations).
Even small businesses in South Carolina are covered by the state’s data breach law if they handle names, Social Security numbers, account logins, or driver’s license info, provided the data is unencrypted or the encryption key is also compromised.
What Does Cyber Insurance Cover?
Most policies offer first-party and third-party protection.
First-party coverage includes:
- Data breach investigation and forensics: To pinpoint the cause and scope of the breach.
- Customer notification and credit monitoring: Covers costs for written, electronic, telephonic, or substitute notices to affected individuals, and optional credit monitoring. (Note: Credit monitoring is not explicitly mandated by S.C. Code § 39-1-90, but is a common best practice.)
- Business income loss because of downtime: Compensates for lost revenue.
- Help paying ransoms after a ransomware attack: Covers payments and negotiation services (when permitted by policy terms and law).
- Crisis communications and public relations: To manage reputational damage.
Third-party coverage includes:
- Lawsuit defense and settlements: If clients or patients sue your business over leaked data.
- Regulatory fines and penalties: From bodies like HIPAA, PCI DSS, or the FTC (when insurable by law). Violations of S.C. Code § 39-1-90 can lead to administrative fines from the Department of Consumer Affairs.
- Liability from breaches caused by IT vendors: Protecting you against claims where your third-party service provider’s negligence causes a breach.
Having both types of coverage can make the difference between recovering and going out of business.
Explore the role of technology in workers’ compensation and how it can strengthen your company’s protection approach.
Common Cyber Threats in South Carolina
South Carolina businesses are seeing more digital attacks each year. The most common include:
- Phishing emails: That trick staff into giving up login details or sending fake payments.
- Ransomware: That locks up your systems until you pay hackers.
- Stolen laptops or phones: With sensitive data, requiring breach notification.
- Unsecured cloud storage: Which can leak files online due to misconfigurations.
- Vendor breaches: Where third-party software or platforms get hacked, impacting your data.
Even a small incident can cost tens of thousands of dollars. A large breach—especially in healthcare or retail—can reach over $1 million.
How Much Does Cyber Insurance Cost?
The cost of cyber insurance in South Carolina depends on your business size, industry, and security practices.
Average premiums:
- Small businesses (<10 employees): $1,200–$3,000 per year
- Midsize firms (10–100 employees): $2,500–$15,000 per year
- Larger businesses: $25,000+ annually, with higher coverage needs
Ways to lower your premium:
- Use multi-factor authentication (MFA).
- Run staff training on cyber safety.
- Encrypt customer and employee data.
- Avoid past cyber insurance claims.
- Bundle with other business policies.
South Carolina rates are generally lower than national averages, but rural areas face slower response times and fewer IT resources, which can increase risks.
What the Law Says About Breach Notification
Under S.C. Code § 39-1-90, here’s what you must do after a breach of the security of the system that involves personal identifying information:
- Definition of “Personal Identifying Information”: As defined in Section 16-13-510(D), this includes the first name or first initial and last name in combination with Social Security numbers, driver’s license numbers, financial account information with security codes, and other identifying data elements that may be used to access financial accounts or uniquely identify an individual.
- Definition of “Breach of the Security of the System”: Unauthorized access to and acquisition of computerized data that was not rendered unusable through encryption, redaction, or other methods, when illegal use of the information has occurred or is reasonably likely to occur, or use of the information creates a material risk of harm to the resident. Good faith acquisition by an employee for business purposes is not a breach if not used or subject to further unauthorized disclosure.
- No Likelihood of Harm Exception: Disclosure is not required if, after a good faith and prompt investigation, the information holder reasonably determines that the breach will not likely result in harm to the affected person. This determination must be documented and retained for five years.
- Disclosure must be made without unreasonable delay following discovery or notification of the breach, in the most advantageous time possible. This may be delayed if a law enforcement agency determines that notification impedes a criminal investigation.
Methods of Notice: Written or electronic notice (consistent with E-SIGN), or substitute notice (if cost exceeds $250,000, affected class exceeds 500,000 people, or insufficient contact info).
- Notify the South Carolina Department of Consumer Affairs (SCDCA): If a business provides notice to more than 1,000 persons at one time, it must also give the SCDCA a copy of the notice sent to consumers. This notification is typically given to the Consumer Protection Division.
- Notify Nationwide Consumer Reporting Agencies: If a business provides notice to more than 1,000 persons at one time, it must also notify, without unreasonable delay, all nationwide consumer reporting agencies (as defined in 15 U.S.C. Section 1681a).
- Third-Party Data Maintainers: If you maintain computerized data containing personal identifying information that you do not own, you must notify the owner or licensee of the information of a breach immediately following discovery.
You do not need to notify anyone if:
- The data was properly encrypted, redacted, or otherwise rendered unusable, and the encryption key or means to render it usable was not acquired.
- A written risk assessment proves no harm is likely (this must be kept on file for five years).
Penalties: A person who knowingly and willfully violates S.C. Code § 39-1-90 is subject to an administrative fine of $1,000 for each resident whose information was accessible by reason of the breach. This amount is decided by the Department of Consumer Affairs. Furthermore, an injured resident may institute a civil action to recover actual damages (or in cases of willful and knowing violation, actual damages, attorney’s fees, and court costs) and seek an injunction.
What to Do After a Breach
If you think your systems were hacked or data was leaked:
- Contact your cyber insurance provider within 24–72 hours (per policy terms).
- Hire a digital forensics team to investigate and determine the scope of the breach and who is affected.
- Notify affected individuals and regulators (if required) according to S.C. Code § 39-1-90.
- Work with PR and legal experts to respond properly and minimize reputational damage.
- Keep records of every step, including forensic reports, notification copies, and remediation efforts, for at least five years.
Some policies may require arbitration if you dispute a claim, but bad-faith insurance handling can be reported to the South Carolina Department of Insurance under the Claims Practices Act (S.C. Code § 38-59-20). However, it’s unlikely that an arbitration clause within the policy can be enforced to prevent you from taking legal action in South Carolina courts, based on current interpretations of state law.
Final Word: Protect Your Business Now
Cyber threats don’t just hit large corporations. A small business in Spartanburg is just as likely to be targeted as one in Columbia. If you collect customer data, run cloud-based software, or accept digital payments, cyber liability insurance isn’t a luxury—it’s a smart business move.
Need help choosing the right plan? Call our experts at 855-718-7552
