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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Claims Examples

Coverage

Problem: A cyber hacker pretends to be a customer and tricks your employee into clicking a malicious link, providing access to your client’s financial information.

Outcome: Your Cyber Liability Insurance covers the costs of informing these individuals of their compromised data and providing credit monitoring, totalling $500,000.

Coverage

Problem: You are a dietitian providing online consultations. A cybercriminal hacks into your system and steals your patient’s confidential data.

Outcome: Your Cybercrime Insurance policy covers the cost to notify clients and subsequent legal expenses.

Coverage

Problem: You run a successful e-commerce business. Your data systems are hacked and your customers’ financial information is compromised.

Outcome: Your Cyber Liability Insurance covers the cost to repair your data systems, notify your customers, and cover legal fees, totalling $455,000.

Cyber Liability Insurance, Explained.

What is Cyber Liability Insurance?

Cyber Liability Insurance covers costs associated with cybercrime involving your technology systems and customer data.

As businesses move into the digital space, cybercrime is becoming more common, making it challenging for business owners to protect themselves from cyber-attacks. If hackers or cyber criminals 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. 

Who needs Cyber Liability Insurance?

You need Cyber Liability Insurance if:

  • You use computer/cloud systems to store data. 
  • You provide software or hardware services to clients. 
  • You use point-of-sale systems. 
  • You store customer/patient data, including medical or credit card data.

What does it cover?

Cyber Liability Insurance typically includes coverage for legal costs and damages related to the following coverage areas: 

  • Incident Response Cost: Coverage for the cost of access to a 24/7 cyber incident response hotline and a dedicated team to assist you in coordinating an incident response following a cybercrime.  
  • Legal, Forensic, and Breach Management Costs: Coverage for legal advice, notification fees, crisis management services, and credit monitoring. 
  • System Damage and Restoration Costs: Repairs and restoration of the software systems damaged due to the cyber event. 
  • System Business Interruption: Coverage for losses sustained due to a system outage resulting from a cyber attack. 
  • Social Engineering (optional coverage): Coverage should an employee be tricked into providing access to a system or sending funds to a fraudulent bank account

Cybercrime Insurance can be purchased in addition to Cyber Liability Insurance to provide coverage for loss of funds due to cybercrime, including phishing, hacking, or social engineering fraud. This policy includes coverage for notification costs, data restoration, and legal expenses.

What is the cost of Cyber Liability Insurance?

A low limit of Cyber Liability Insurance (~ $50K) is typically included in Professional Liability Insurance policies for an additional $100 – $200/year. Business owners who store sensitive data or require a higher limit may opt for a standalone policy, which costs approximately $750 – $1K/year. 

The following factors are typically taken into consideration when determining the cost of your premium:

  • Industry and Services Offered
  • Amount of Client Information Stored 
  • Security Systems In Place 
  • Employee Training on Cybersecurity

In the online quote application, we ask your business some questions to understand your coverage needs better.

What is the difference between Cyber Insurance and Data Breach Insurance?

The main differences between cyber insurance and data breach insurance are what and who is covered. Cyber insurance provides coverage for most cyber incidents to your business (first-party) and others (third-party).

In contrast, data breach insurance only covers costs associated with damage to data you possess or are responsible for (first-party), including notification costs.

What is not covered?

Cyber Liability Insurance does not typically provide coverage for damage or loss due to: 

  • An employee hacking or damaging your systems or data. 
  • A power surge or failure resulting in damage to your systems or data (this is covered by Equipment Breakdown insurance). 
  • Patent/IP infringement (you can purchase this coverage separately).

Frequently Asked Questions

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.

Other business insurance coverage options to consider:

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