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Cyber Liability Insurance

Cyber liability insurance is fast becoming essential in any business’s risk management strategy. Statcan reported that about 18% of Canadian businesses experienced cyberattacks in 2021.

That shows that you and your business may not be safe from cyber insecurities. However, cyber liability insurance helps to mitigate against the full wrath of its consequences.

Cyber liability insurance for businesses covers various expenses associated with cyber incidents. These include legal fees, data recovery costs, and compensation for customers whose personal information is lost or stolen.

Several insurance companies in Canada offer coverage for cyber attacks, including Apollocover. They offer bespoke solutions that are tailored to your business’s specific needs.

Whether you want to learn about the concept or what it takes to buy, you are in the right place. This comprehensive guide explains the ins and outs of cyber liability insurance. It includes: 

  • what this insurance policy covers
  • the costs associated with cyber liability coverage
  • why it’s important to protect your business against cyber threats.

What is Cyber Liability Insurance?

Cyber liability insurance is also known as cyber security insurance, cyber business insurance,  or data breach insurance. It is an insurance policy designed to protect businesses against financial losses and damages from a data breach or cyber attack.

In today’s increasingly digital world, cyber risks are an ongoing concern for all organizations, regardless of size or industry.

Cyber-attacks have severe consequences for businesses, from theft of sensitive information to the costs of restoring systems and reputational damage. Hence, the design of cyber liability insurance for businesses.

Factors to Consider when Buying Cyber Insurance

When buying cyber business insurance, consider the following factors:

  1. Coverage: Ensure the policy covers all the potential risks, such as data breaches, business interruption, and liability for third-party damages.
  2. Limits: Check the maximum amount the insurance will cover in case of an incident.
  3. Deductibles: Determine the amount you will need to cough from your pocket in case of an event.
  4. Exclusions: Understand what types of losses and incidents are not covered by the policy.
  5. Reputation: Research the insurance company’s reputation, financial stability, and track record in handling cyber liability claims.
  6. Policy language: Read the policy language carefully to thoroughly understand the applicable terms and conditions.
  7. Claims process: Evaluate the claims process, including the time frame for reporting and resolving claims.
  8. Cost: Check to ensure that the cost of the policy fits within your budget.
  9. Customization: Consider the possibility of customizing the policy to fit the specific needs of your business.
  10. Additional services: Determine if the insurance company offers other services that can help minimize your exposure to cyber risk.
cyber liability insurance

Types of Cyber Business Insurance 

First-Party Cyber Insurance 

This covers the costs of responding to a data breach, such as notification, credit monitoring, and public relations.

Third-Party Cyber Insurance

This covers the costs of defending against lawsuits and paying settlements or judgments arising from a data breach.

Standalone Cyber Insurance

This type of coverage is designed specifically for cyber risks and is separate from other types of liability insurance.

Combined Cyber and Technology E&O (Errors & Omissions) Insurance

This coverage combines cyber liability, technology errors, and omissions insurance into a single policy.

Business Interruption Insurance

This helps compensate a business for losses incurred from a cyber attack that could lead to downtime.

Note: the type of coverage a business needs depends on the specific risks they face and the size and type of its operations.

Process of Buying Cyber Business Insurance

The process of buying cyber business insurance typically involves the following steps:

  • Assessing your business’s cyber risks: You need to determine what types of cyber threats your business faces and what coverage you need to protect.
  • Shop for coverage: Research companies that offer cyber business insurance and compare the coverage and costs of various policies.
  • Choose a policy: Based on your research and assessment, select the policy that best meets your business’s needs and budget.
  • Review and sign the policy: Carefully review the insurance’s limits, inclusions and exclusions before signing the policy.
  • Work with an agent: A knowledgeable insurance agent can help you find the right policy and answer any questions you may have.
  • Purchase the insurance: Once you’ve found the right policy, complete the application process and pay.
  • Implement security measures: In addition to purchasing insurance, it’s essential to have a robust cybersecurity system in place. It helps to prevent cyber incidents and reduce your business’s overall risk.
  • Review and update coverage: Regularly review and update your cyber liability insurance for businesses coverage to ensure it continues to meet your business’s changing needs.
cyber liability insurance

Who Needs Cyber Liability Insurance?

  • Small Businesses: Cybercriminals often target small businesses because they may have weaker security systems and limited resources to respond to a cyber-attack. Cyber liability insurance can help cover the costs associated with a data breach, including legal charges, notification, and credit supervision. The following types of businesses are those that are most in need of it:
  • Online Retailers: Online retailers are particularly vulnerable to cyber-attacks because they handle sensitive customer information such as credit card numbers and addresses. It can help cover the costs of losing this data and remediation costs.
  • Healthcare Providers: Healthcare providers are subject to strict patient data regulations and must maintain this data’s confidentiality. Cyber business insurance can help cover the costs of a data breach, including notifying patients and other fees.
  • Financial Institutions: Financial institutions handle large amounts of sensitive customer information and must maintain the confidentiality of this data. 
  • Government Agencies: Government agencies are also vulnerable to cyber-attacks because they handle sensitive information about citizens.

Cyber Liability Insurance Coverage

Cyber insurance can help mitigate the financial impact of these risks by providing coverage for a range of cyber incidents, including:

  1. Data breaches include unauthorized access to sensitive data, such as customer information and financial records, and the costs associated with notifying affected individuals and providing credit monitoring services.
  2. Network security incidents: This covers the costs of restoring systems and data following a cyber attack, such as malware, viruses, and hacking.
  3. Business interruption: This covers lost income and extra expenses incurred due to a cyber attack that results in the temporary shutdown of a business.
  4. Reputational damage: This covers costs associated with restoring a company’s reputation following a cyber incident, such as public relations and advertising expenses.
  5. Regulatory fines and penalties: This covers the costs of complying with regulatory requirements following a cyber attack. Examples are fines and penalties imposed by government agencies.
  6. Cyber Extortion: In the event of a cyber attack or hacking, insurance can cover costs associated with paying a ransom or negotiating with cybercriminals.
  7. Privacy Liability: Privacy liability insurance covers legal expenses and fines incurred in the event of a privacy violation, such as the unauthorized release of personal data.

In summary, cyber business insurance covers the technical, legal and financial costs. It helps businesses to manage and recover from the effects of a cyber event.

What Cyber Liability Insurance Does Not Cover

It is essential to note that not all losses are covered by cyber liability insurance for businesses. Some common exclusions or things not typically covered include

  • Losses caused by employee negligence, such as failure to properly secure sensitive information or failure to follow company security protocols.
  • Losses result from viruses or malware that the policyholder intentionally spreads.
  • Physical damage to computer equipment or other hardware.
  • Losses from failure to comply with regulations specified in the policy.
  • Reputational damage, such as loss of brand authority or customer mistrust.
  • Losses result from unauthorized access to systems or data before the policy was in effect.
  • Losses from intentional acts of cybercrime, such as cyberstalking or cyberbullying.

Expert tip: We recommend you carefully review the terms and conditions of a cyber business insurance policy to understand what is and is not covered. That will help ensure that the policyholder is adequately protected against potential losses in the event of a cyber-attack or data breach.

cyber liability insurance

Cyber Liability Insurance Brokers in Canada

Cyber liability insurance brokers in Canada help clients assess their risk of cyber attacks and secure insurance coverage to protect against financial losses resulting from a breach of sensitive information. Some popular brokers in Canada include

Apollo 

Apollo business insurance is a Canadian company that provides insurance products to businesses and organizations. Apollo business insurance prides itself on providing a customized approach to meeting each business’s needs.

Some of the insurance products offered by Apollo include Professional Liability  Insurance, cyber Liability Insurance and General Liability Insurance.

Willis Towers Watson

They provide Cyber Insurance, which helps businesses protect against losses from data breaches, cyber-attacks, and other digital risks.

The insurance covers various costs such as investigations, legal fees, public relations, credit monitoring, and notification to affected individuals. You can customize the coverage to meet the specific needs of each business.

The Co-operators

Co-operators provide 24/7 support and monitoring services to help enterprises prevent cyber-attacks and respond quickly in case of an incident.

They cover legal fees, customer compensation, data recovery, and business interruption expenses. The company also offers educational resources to enable enterprises to understand the risks associated with cyber threats.

RSA Canada

RSA Canada provides Cyber business insurance services to protect organizations against financial losses from cyber-attacks, data breaches, and other digital risks.

They cover first-party and third-party losses, privacy breach notifications and defence costs. The insurance services also provide access to a network of experts who can assist in the event of a cyber attack.

Chubb Insurance

Chubb insurance provides Cyber Liability Insurance services to protect businesses and individuals from potential cyber threats and data breaches.

This insurance covers financial losses, legal fees, and liability claims due to unauthorized access, theft, or destruction of sensitive information. Chubb also offers crisis management services, including IT forensics and breach response, to assist policyholders in the event of cyber-attacks.

Intact Insurance

Businesses of all sizes minimize the impact of cyber threats and protect their assets, reputation, and bottom line. Intact Insurance provides Cyber business insurance services that protect businesses against cyber attacks, data breaches, and other online risks.

The broker also provides monetary compensation for loss of income and reputational damage caused by cyber events.

Marsh Canada Limited

Marsh Canada Limited is a leading provider of Cyber Liability Insurance services in Canada. They offer comprehensive coverage for businesses of all sizes, including protection against data breaches, cyber extortion, and network security incidents.

They also provide tailored coverage solutions for specific industries, such as healthcare and financial services.

Aon Canada

Aon Canada provides Cyber Insurance services, including coverage for data breaches, network security incidents, and cyber extortion. They offer customized solutions for businesses of all sizes, including risk assessments, incident response planning, and crisis management.

Willis Towers Watson

They offer Cyber Liability Insurance services in Canada. Their services include coverage for data breaches, cyber extortion, network security incidents, and risk management solutions.

Gallagher

Gallagher offers comprehensive coverage for businesses of all sizes, including protection against data breaches, network security incidents, and cyber extortion. They also provide risk management solutions, such as cyber security training and incident response planning.

JLT Canada

JLT Canada offers comprehensive coverage for businesses of all sizes, including protection against data breaches, network security incidents, and cyber extortion. They also provide risk management solutions, such as cyber security training and incident response planning.

Hub International Limited

Hub International Limited provides comprehensive coverage for businesses of all sizes, including protection against data breaches, network security incidents, and cyber extortion. They also offer risk management solutions, such as cyber security training and incident response planning.

General tip: Working with a trusted broker to ensure you have the appropriate coverage for your business’s specific needs is essential.

Cyber Liability Risk Management

Risk management for cyber liability insurance involves identifying and assessing the potential risks a company may face due to its use of technology. To manage these risks, companies can implement various measures, such as:

  • Developing and implementing robust security measures.
  • Regularly backing up data and testing data recovery plans.
  • Educating employees about cyber security and their role in protecting sensitive information.
  • Implementing technical controls such as firewalls and other encryption procedures.
  • Regularly monitoring and assessing the effectiveness of security controls.
  • Having a cyber-attack response system in place for when a breach does occur.

By effectively managing these risks, companies can reduce the likelihood of a cyber event occurring and the impact if it does happen, making it easier to recover from a breach and potentially reduce the cost of their cyber liability insurance policy.

Cyber Insurance Event Response 

When an event that might be covered by cyber business insurance occurs, you should take the following steps:

  • Exercise no delay in reporting any event to the insurance provider.
  • Follow the company’s reporting procedures and provide all necessary information about the incident.
  • Preserve all relevant evidence and documentation related to the incident. Cooperate with the insurance company and any appointed third-party investigators in the claims process.
  • Implement any recommended measures to mitigate further damage and secure the affected systems.

Expert tip: the exact response procedure can vary based on the specific policy and the nature of the incident. Therefore, we recommend you consult the policy or the insurance company for guidance.

Final Thoughts on cyber liability insurance

Cyber liability insurance is critical to managing risk in today’s digital landscape. Businesses must take proactive measures to protect themselves from the financial and reputational damage that can result from a cyber incident. However, ensure to purchase insurance from a reliable provider.

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FAQs about cyber liability insurance

Is Cyber Insurance vital for my business?

Yes, cyber liability insurance is vital for your business. The increasing use of ICT in all businesses has made many operations prone to cyber-attacks and other related incidents. These incidents can result in significant financial losses, damage to your reputation, and legal liabilities.

What is the cost of Cyber Liability Insurance in Canada?

The cost of Cyber business Insurance in Canada can vary greatly depending on the size of the business, the industry, and the level of coverage needed. On average, Cyber Liability Insurance for businesses in Canada can range from $500 to $5,000 annually for small businesses and up to several hundred thousand dollars for larger companies. Expert tip: We recommend researching and comparing costs from different insurance companies to get your business's best coverage and pricing.

Will an institution's cyber liability insurance premiums rise after making a claim?

Generally, an institution's cyber insurance premiums may increase after making a claim. Insurance companies determine premiums based on the risk involved, and making a claim means that the institution has had a loss or breach. The premium increase may vary depending on the severity of the violation, the frequency of claims, and other factors.

Will other types of insurance cover cyber risk?

Some other forms of insurance, like commercial property or general liability insurance, may provide some coverage for cyber risks. However, these policies are not explicitly designed for cyber threats and may have limited coverage. Expert tip: For comprehensive protection against cyber threats, we recommend you have a separate cyber insurance policy.

What kind of risks does cyber liability insurance protect against?

Cyber liability insurance protects against many cyber risks, including data breaches, hacking, cyber fraud, cyber extortion and ransomware attacks, loss of income, and legal and regulatory liabilities.

Is cyber business insurance a requirement for businesses?

Cyber business insurance is not a legal requirement for businesses but is highly recommended. Cyber threats are becoming increasingly common, which could cause businesses significant monetary losses. It helps businesses to mitigate these risks.

What is the difference between data breach insurance and cyber insurance?

Data breach insurance is a type of cyber liability insurance that specifically covers the costs associated with data breaches, such as notification, credit monitoring, and legal and regulatory liabilities. Cyber liability insurance for businesses can include coverage for data breaches but also protects a broader range of cyber threats.

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