The reality is, of the 1.14 million small businesses in Canada, only 14% are prepared to defend themselves in the event of cybercrime. Are you one of them?
What Is Small Business Insurance?
In Canada, small business insurance is a policy package that protects Canadian business owners against loss or damages due to a broad spectrum of liability issues, such as slip-and-fall or property damage. Within this package, there are three policies, which are recommended to protect business owners against cybercrime:
- Cyber Liability Insurance: Perhaps the most obvious coverage to add to your policy to protect your business from cybercrime, Cyber Liability Insurance covers costs associated with a breach involving intangible assets, such as customer data. Should you be the victim of a cyberattack, a Cyber Liability Insurance policy could cover the cost of legal fees, technical investigations, loss of revenue from customers, and loss or damage to electronic data. Here are some other areas where Cyber Liability Insurance can cover you after a cyberattack:
- Notifying clients and partners of a breach;
- Credit monitoring services for clients or partners;
- Coverage for extortion or blackmail costs;
- Hiring a public relations firm to deal with the backlash; and,
- Legal fees and regulatory penalties.
- Errors & Omissions (E&O) Insurance: Also known as Professional Liability Insurance, Errors & Omissions Insurance protects business owners from claims alleging negligence or failure to deliver a service as promised. What does this have to do with cybercrime? For those responsible for protecting a company’s electronic data, like a software developer who made a coding mistake or IT consultant that suggested a faulty anti-virus software, you may be found liable for negligence that led to a cyber breach. Consider the web design firm that was sued after one of its clients was hacked. If it could happen to them, it could happen to you.
- Business Interruption Insurance: Business Interruption Insurance could be the difference between staying in business and going bankrupt if you need to temporarily shut down your business to put your effort towards restoring operations and securing data following a breach. Business Interruption Insurance covers income lost during the time it takes to get your business back up and running. In this context, ‘income’ refers to salary, overhead costs (e.g., rent, electricity), and the cost of restoring your business.
Keep in mind, a Cyber Liability Insurance coverage is usually excluded from a Commercial General Liability Insurance policy, so it is vital to check in with your broker regarding the limitations of your policy.