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Today, most businesses rely on computer systems and data in order to operate. But as a result, viruses, hackers and other computer attacks can happen to more and more types of businesses at any time—putting them at risk of losing critical information belonging to them or their customers.
But who needs Cyber Liability Insurance specifically? Is your business on the list, or can you get away with not having it? And if you need it, how does it work? Keep reading to learn everything you need to know about cyber liability protection for Canadian businesses like yours.
Cyber Liability Insurance protects businesses because it’s designed to pay the costs associated with recovering lost data—or restoring computer systems—after a data breach. It covers five elements of online security: network security, privacy, business interruption, media liability, and errors and omissions.
Without Cyber Liability Insurance, your business is vulnerable to having to pay the potentially major costs of dealing with a data breach. These costs include things like paying damages and restoring digital assets like intellectual property, employee records, customer data (i.e., credit card information), financial statements, media files, and more.
It’s important to know that there are two types of Cyber Liability Insurance: first-party and third-party. As a business, you’ll want both.
First Party Cyber Liability Insurance pays for the costs your business incurs as a result of a data breach. Things like replacing hardware or covering a temporary closure.
Third-Party Cyber Liability Insurance pays for the costs incurred by others as a result of a data breach within your company. Things like paying any damages or legal fees associated with client information being stolen.
Every business that relies on a computer system or the use of data for daily operations and/or stores customer data should have Cyber Liability Insurance. This includes everything from large organizations to sole proprietors. No business is too big or too small to need (or be exempt from needing) cyber liability protection!
Your business needs Cyber Liability Insurance if you:
This is by no means an exhaustive list, but even with the few points included, it’s easy to see that most modern businesses need at least a moderate level of Cyber Liability Insurance.
It’s hard to think of a business that wouldn’t need any type of cyber protection because every business that relies on computer systems or client data benefits from this coverage. It’s always best to have the most comprehensive protection in place for these reasons and because you just never know when, where, or how a cyber attacker could strike.
Viruses and cyber attacks continue to be growing problems, and both can significantly impact bottom lines. And, cyber criminals are also getting more refined in their approaches. So really, any business could be at risk at any time. (We’ve even seen situations where a disgruntled employee is behind an attack!)
A cyber liability insurance policy helps to pay for the costs associated with repairing your systems or recovering your lost data. These costs can be quite high and can negatively impact a company’s bottom line in serious ways. (The average data breach costs over $85,000!) So it’s always best to transfer those costs to an insurance company.
Because every company has different coverage needs, there’s really no baseline for Cyber Liability Insurance. As is always true with insurance, those with higher levels of risk will need more coverage, while those with less measured risk can handle less.
It’s tricky to figure out exactly how much coverage you need. The best thing to do is reach out to an Insurance Broker (like us!) to get a custom quote.
But, if you’d like a ballpark idea, it can be a good idea to think about how much you imagine a data breach would cost your company. (In other words, to calculate the value of your digital assets.) As a rule of thumb, that’s the minimum amount of total coverage you’ll want to have.
To assess the range of coverage your company may need, you’ll want to take things like digital assets, hardware, software, business interruption, and associated fees into account.
Most companies have more digital assets than they think they do. You’ll want to account for things like intellectual property and customer information, but also for less-obvious assets like the information stored by your Point of Sale system. And, don’t forget to consider all of the devices, systems, and channels you use to store data while you calculate.
Tally up the cost of replacing compromised hardware (like computers and tablets) as well as software (like your client management system).
Would your business have to close its doors temporarily if you experienced a data breach? If so, for how long? Think about the cost of a temporary closure, and factor that into your equation.
Finally, tack on added costs for legal fees and damages in the event your company is taken to court or sued over customer information being lost. And, consider if you could handle the public relations side of a breach like this in-house, or if you’d need to hire support.
As you can probably tell, these numbers add up fast, and there are details of cyber liability that are easily overlooked. We recommend you speak with an Insurance Consultant to get the most accurate information possible!
Cyber Liability Insurance costs vary a lot because the digital assets of different companies also vary a lot. As a result, premiums start as low as $100 per month and go up to $10,000 per month and beyond (for companies with the highest levels of risk).
The best way to find out what your specific company needs and costs are is to request a detailed quote. We’ll work with your IT department (or whoever is in charge of tech and security) to get all of the information we need, then give you exactly the details you need.