Cyber Liability Insurance

Cyber Liability Insurance

When business systems are breached or hacked, you can incur costly containment and repair expenses, with the risk of lawsuits brought on by 3rd parties.

Cyber Liability Insurance protects businesses against these risks.

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What is Cyber Liability Insurance?

If hackers or cybercriminals infiltrate your business network, take over your website, hold data hostage, or steal sensitive client information, you can be held liable for the incident besides having to take care of the recovery costs.  Cyber Liability Insurance, also known as Cyber-security Insurance, helps businesses recover from and manage costs associated with such an event.

As reported in a recent article by PCMag, the average cost for data breach for Canadian businesses was an astounding $4.74 million, hence the importance of a robust Cyber Liability Insurance.

Cyber Insurance Coverage

What does Cyber Insurance cover?

There are two major types of Cyber Insurance coverage:

  • First-party insurance provides coverage for direct costs associated with responding to the failure and managing the incident.
  • Third-party insurance provides coverage for lawsuits or claims that come as a result of a cyber incident.

Cyber Liability Insurance can cover the following:

  • Breach Assessment & Repair
  • Reputation Management and hiring a PR or crisis management firm
  • 3rd party legal fees & settlements
  • Regulatory fines your company could be ordered to pay
Cyber Insurance Requirement By Profession

Who needs Cyber Liability Insurance?

Canadian business owners may think they don’t need Cyber Liability coverage unless they are in the tech industry. The reality is that any business is at risk of a cyber-attack. If your business handles any of the following, you should consider Cyber Liability insurance:

  • Customer payment, credit, or bank account information
  • Medical information
  • Social Insurance Numbers (SIN) or driver’s license numbers
  • Customer names, email addresses, phone numbers, and addresses

Retailers, healthcare organizations, and financial service providers are especially at risk because they handle large amounts of sensitive and lucrative client information. These sectors often lack the technical sophistication to have robust security measures.

Learn more about how to protect your business against cyber attacks.

Cyber Insurance Costs

How much does Cyber Insurance cost?

Cyber Insurance starts at $200/year for most companies, but companies holding financial data or healthcare information can expect to spend over $1000/year.

The final cost of a Cyber Liability policy varies according to factors such as:

  • Industry
  • Level of experience in the industry
  • Past cyber attacks
  • Company size
  • Amount of client information stored
  • Security systems in place
  • Employee training on cybersecurity

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Common scenarios where Cyber Insurance is useful

IT Systems Being Compromised

A virus enters your IT system and damages your electronic data, causing your business to screech to a halt. A cyber liability policy will cover the costs of business interruption.

Hacker stealing information

A hacker steals your electronic data and threatens to sell the information unless you pay him to recover the files.

Company being cyber attacked

A data breach has left your company with a bad reputation with clients and vendors. A cyber liability policy will cover marketing costs to recover your reputation.

Frequently Asked Questions about Cyber Insurance

What are the most common types of cyber attacks covered by cyber liability insurance?

Malware: malicious software that usually make their way through with link clicks and attachment downloads.
Phishing: fraudulent emails to steal information or encourage malware downloads.
DDoS (Distributed Denial of Service): bombarding a business’s server with multiple simultaneous requests to stop it from fulfilling legitimate requests.

Does my E&O policy already cover cybersecurity?

No, it is a common misconception that Technology Errors and Omissions (Tech E&O) coverage provides protection against cybercrimes. Tech E&O covers losses resulting from technology services and technology products but it will not protect you in case of loss of private third party information.    

Does cyber insurance cover cyber extortion (ransomware)?

Cyber extortion coverage is not included by default in all our cyber liability insurance packages. If you require cyber extortion coverage, discuss it with your assigned broker. It provides coverage for extortion related expenses such as hiring a consultant or negotiator and repair costs if the recovered data is locked or damaged.

Do hackers even target small businesses (do small businesses need cyber liability insurance)?

Yes. According to StatCan, one-fifth of all Canadian businesses were targeted by hackers in 2017. Hackers especially prefer small businesses because they are considered ‘low-hanging fruits’. Cyber security measures are expensive, and small businesses usually don’t have the infrastructure and trained personnel in place to prevent these attacks.

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