“So far the feedback from our agencies has been positive and we've learned the awareness of this is not pronounced,” says Holly Moriarty, marketing director for Hartford small commercial insurance.

Small businesses likely do not have the resources of big business to combat and recover from data breaches.

“Response is critical and it could be complicated, with different regulations requiring different responses in each state,” Moriarty explains.

The insurance—an endorsement to the company's Spectrum business-owners' policy—provides coverage for expenses and legal liability as well as access to services to help comply with regulations and customers' concerns, such as how to notify customers, craft letters and perform credit monitoring.

“Customers are important to any business, but with small business, many times they think of their customers as extended family,” Moriarty says. “Relationships are formed. You know their names and faces. They don't want to jeopardize that relationship.”

Hartford has partnered with Identify Theft 911 to provide policyholders with risk management advice to protect against data breaches, Moriarty adds.

The coverage could be beneficial to restaurants and retailers as well as businesses that store client or patient data, like those in healthcare, financial or professional services.

According to a report by Verizon, of 760 data breaches analyzed in 2010, nearly two-thirds involved businesses with less than 100 employees.

The report finds that breaches typically do not require a high degree of sophistication and victims are a target of opportunity rather than choice.

Almost all breaches are avoidable with expensive corrective actions, says Verizon.