Ask a small business owner if they’d rather deal with a fire or a cyber attack, and the answer may surprise you. Over the last year, over half of the small businesses suffered a data breach. With recovery costs averaging at $200,000, most small companies aren’t financially equipped to deal with the rise in cybercrime.
With businesses becoming increasingly more digital, small business owners need to know that it isn’t a matter of if their business will be the target of cybercrime, but rather when.
Small business insurance in Canada is designed to protect small business owners from common risks, including cybercrime. It seems like a straightforward solution. If 43% of cyberattacks target small businesses, then owners would protect themselves with insurance.
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.
How Much Does Small Business Insurance in Canada Cost?
The cost of small business insurance in Canada is nowhere near the astronomical as the $200,000 cost of cleaning up after a data breach. The price of insurance for Canadian small business owners varies based on several factors, such as business size, location, and projected revenue. On average, a small business owner can expect to pay $450.00 a year on a small business insurance policy with a two million dollar limit.
How Can I Protect My Small Business From A Cyber Attack?
We know protecting your business means having a proactive risk management strategy, instead of relying on a reactive crisis management strategy. Here are four quick tips for reducing your cybersecurity risk:
- Do not store payment information (e.g., credit cards, banking info)
Hackers can target point-of-sale systems and compromise your customer’s financial information. One option to avoid this is to use a third-party payment provider with built-in security software.
- Include your employees in your risk-prevention strategy
Hackers love employees. Not because they leak information, but because they may inadvertently cause a data breach via lack of training. Every employee should know how to identify and respond to cyber threats.
- Install the best tools to protect your business against viruses, phishing, and malware.
Many small business owners assume that cyber attackers are more likely to target big companies with more capital, so they try to save money by opting for free or low-cost cybersecurity solutions. By doing so, they make themselves more vulnerable to hackers. Spring for the higher quality solution, it will pay for itself.
- Use multi-factor authentication to secure your network.
You know when you forget the password to your email, and you spend the next five minutes going through seemingly endless steps to recover your password? That’s multi-factor authentication, and it keeps your network secure by requiring you to prove you are who you say you are. Multi-factor authentication uses a combination of something you know (i.e., a password), something you have (i.e., a phone) and something you are (i.e., a fingerprint). It may seem tedious, but if it means securing your business, we think it’s worth the hassle.
Just like a cyberattack, small business insurance can be confusing and overwhelming, but it doesn’t have to be. At Zensurance, we’ve cut down on the jargon to make it easy to protect your small business in the event of a cyberattack.
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