What Small Businesses Need to Know About Cyber Insurance

Purchasing cyber liability insurance is vital for safeguarding your business’s financial future.

Common Cybersecurity Threats Facing Canadian Small Businesses

A recent Zensurance survey of 1,000 Canadian small business owners in September 2025 found more than half (53%) had already experienced an attack. Among those targeted:

• 46% faced phishing attacks
• 23% experienced malware
• 19% were victims of fraudulent transfers
• 6% endured ransomware
• 6% reported distributed denial-of-service (DDoS) disruptions 

The financial cost of recovering from a cyber-attack can be significant for Canadian small businesses. It’s not just about data loss, but also about the potential loss of revenue and customer trust that could ultimately shutter your business. Consider the following:

• According to the Canadian Anti-Fraud Centre (CAFC), there have been over 50,000 reports of fraud in Canada, with over $647 million stolen in 2024. CAFC notes it received 24,411 reports of online fraud so far in 2025, resulting in $342 million in losses.
• The evolution of artificial intelligence-powered cybercrime is on the rise. AI-powered attacks are faster and more difficult to detect. In our same online survey of Canadian business owners, when asked about AI-driven cyber-attacks, respondents revealed a stark divide:
  • 34% already see them as a major threat
  • 40% view them as an emerging risk
  • 16% believe only larger companies are at risk
  • 10% aren’t concerned at all

Although many entrepreneurs acknowledge the risk, a considerable number still underestimate the immediate danger presented by AI-powered cybercrime.

• According to Sophos, a cybersecurity provider, ransomware attack victims identified exploited vulnerabilities (security weaknesses or flaws in software or systems) as the most common technical root cause of attack, used in 32% of incidents. Excluding any ransom paid, the average cost to recover from a ransomware attack is $1.53 million.
• IBM’s report on data breaches in 2025 reveals that the average cost of data breaches is US$4.4 million, and 97% of organizations that reported an AI-related security incident lacked proper AI access controls.
• Alarmingly, the Insurance Bureau of Canada’s (IBC) 2024 Cyber Security Survey of small businesses found that nearly half (45%) of survey respondents believe there is a chance their business is currently vulnerable to a cyber-attack or data breach; however, 62% do not consider cybersecurity a financial priority.

Small Businesses Need to Get Serious About Cybersecurity

Small businesses, sole proprietors, and independent professionals are not immune to various types of cyber-attacks.

That 62% of Canadian small businesses don’t consider cybersecurity a financial priority and only 18% have cyber insurance, as per IBC’s report, puts them on the frontline for a financially devastating attack.

There are many inexpensive things small business owners and sole proprietors can do to increase their cybersecurity defences, such as:

• Use complex passwords with at least 12 characters, including numbers, symbols, and uppercase and lowercase letters. Deploy multifactor authentication (MFA) that requires your employees to verify their identities when logging onto your systems. For example, you can turn on two-step authentication for free if your business uses Gmail.
• Regularly update your computer and mobile phone operating systems, and deploy antivirus software on your systems.
• Backup and encrypt your company data regularly and store it in multiple locations, such as encrypted cloud storage and external hard drives. Use role-based access controls to restrict access to sensitive company data.
• Secure your company’s Wi-Fi network with WPA3 encryption and use a strong, unique password for employees to access it. If you offer your customers free Wi-Fi access, set up a separate network for them to use.
• Monitor your internal network constantly for unusual activity and unauthorized access. Perform security audits regularly and immediately address any identified vulnerabilities.
• Ensure your online and digital payment systems comply with the Payment Card Industry Data Security Standard (PCI DSS). Take action to protect your business’s point-of-sale (POS) system from fraud.
• Train your employees on cybersecurity best practices and ensure they can recognize phishing emails, suspicious links, and social engineering attacks. For instance, you can test your employees through a game called ‘Capture the Flag’, which is a gamified training exercise employees participate in to solve cybersecurity-related challenges by finding hidden flags (flag-001) on various webpages. 

How Cyber Liability Insurance Can Help Your Small Business

Cyber liability insurance can be added to your existing overall policy or purchased as standalone coverage. It’s designed to help businesses or independent professionals deal with and recover from a cyber-attack or data breach.

Specifically, cyber liability insurance helps by:

• Covering the cost of access to an IT cyber incident response team to assist your business in coordinating a response following an attack. For example, the support team will tackle all the subsequent events of a cyber-attack, such as advising your customers who have had their data stolen.
• Providing coverage for legal advice, crisis management services, notification fees and credit monitoring for your business and customers.
• Paying to repair and restore your compromised software systems.
• Covering your income losses due to a system outage following a cyber-attack.
• Helping cover lost funds due to a successful social engineering attack that results in being defrauded (an optional coverage you can include in your policy).

In addition to cyber liability insurance, you can also buy cybercrime insurance to cover loss of funds from specific types of attacks, including phishing attacks, spear-phishing attacks, or a hacker infiltrating your servers, website, and email accounts.

For example, it covers funds transfer fraud if you transfer money to a customer or supplier, and a hacker intercepts and reroutes the cash in transit so your customer doesn’t receive it.

Here’s the critical point: acquiring cyber liability insurance after experiencing a cyber-attack or data breach will not help. It’s essential to secure this coverage now, concurrently with strengthening your cybersecurity defences, to prevent an attack from devastating your business.

Frequently Asked Questions About Cyber Liability Insurance

What’s the difference between cyber liability insurance and cybercrime insurance?
Cyber liability insurance covers the response and recovery costs after a cyber-attack or data breach. Cybercrime insurance focuses on financial losses from crimes, such as phishing, wire fraud, or payment system hacks. 

Does cyber insurance cover ransomware attacks?
Yes. Most Canadian cyber liability policies cover ransomware-related expenses, including negotiation support, system recovery, and, in some cases, ransom payments.

Does cyber liability insurance help with a business’s reputational damage following an attack or data breach?
Yes. Many policies include coverage for crisis management, PR consulting, and customer communication, which helps Canadian businesses rebuild trust and protect their reputation after a data breach.

How quickly does cyber liability insurance respond after filing a claim following a cyber incident?
When a Zensurance client needs to file a cyber insurance claim, our team springs into action to assist the business owner immediately by helping them report it to their insurer. Most policies include 24/7 access to an incident response team. Once a breach is reported, you are connected with IT forensic experts, legal advisors, and crisis managers to minimize damage.

How to Get Comprehensive Cyber Liability Insurance Quickly

Zensurance is Canada’s leading small business insurance provider, helping small business owners, entrepreneurs, and self-employed professionals get the low-cost, comprehensive cyber liability insurance protection they need quickly and easily.

Complete our online application for a free quote in less than five minutes.

Let our knowledgeable team of brokers get the low-cost coverage you need from one of more than 50 insurers in our partner network, advise you on the coverage limits your policy requires, and help you protect your digital assets and finances.

– Updated September 29 2025.