The Ultimate Guide to Cyber Liability Insurance in Canada

Recovering from cyber attacks on your business is a financial strain that not many companies can recover from. But with cyber liability insurance, all related legal fees, notification costs, system recoveries, fines, and lawsuit costs are covered, allowing you to recover no matter how hard you’re hit.

However, not all cyber liability insurance policies were made equal. Throughout this article, we’ll discuss the intricacies of the plans and even show you how we can help you get the cover you need.

 

What Is Cyber Liability Insurance?

Cyber liability insurance is relatively new to the playing field compared to other types of insurance. In a digital attack or data breach, your company can be held liable for causing damage or impacting the privacy of third parties and clients. During a lawsuit, you may have to stump up the costs for fines, system recoveries, recovering victim losses, lawsuits, and more.

As we’re sure you can imagine, the money can quickly add up — IBM Security concludes the average cost of a data breach in Canada is a whopping $6.75 million in 2021. Naturally, a setback of this size would cause many businesses to fold, especially those on the smaller side of the scale.

Thankfully, cyber liability insurance covers financial losses from cyber events like attacks and data breaches. However, it’s worth understanding that every policy is different and can change depending on your industry and the insurer. Not to mention that it’s still changing as the technology space evolves.

 

What Does Cyber Liability Insurance Cover?

While the policy specifics vary, cyber liability insurance generally covers the following:

  • Legal, Forensic, and Breach Management Costs — It covers the costs of crisis management services, legal advice, notification fees, and credit monitoring services. Defense costs, awards, and settlements are covered too. Although, it’s important to remember that it’s limited to specific cyber-related lawsuits.
  • Incident Response Cost — This part of the cover sorts out the cost of access to an always-open cyber incident report hotline where you can acquire assistance from a dedicated team of professionals. They help coordinate incident response plans after your business suffers a cybercrime.
  • Identity Theft — Some policies extend coverage to protect you from cyber events involving stolen identities. It can include helping you recover your personal information or funding the monetary losses related to the theft.
  • Cyber Extortion — Cyber extortion is a type of cyber attack where the perpetrator holds your information or the access to information ransom. Cyber liability insurance gives you funds to cover your response or the extortion demands. However, different insurers have different rules for this section of the policy.
  • System Business Interruption — You will likely experience business system shutdowns during a cyber attack. In that case, this part of the cover reimburses you for any losses experienced during the interruption.
  • System Damage and Restoration Costs — It covers the costs of repairing or restoring software systems damaged during a cyber event.
  • Social Engineering —  It’s optional cyber liability insurance coverage that protects you if an employee is tricked into providing undue system access or sending money to a fraudulent account.
  • Reputation Recovery — Data breaches and other cyberattacks could damage your company’s reputation. In these events, your cyber liability insurance may cover the marketing and public relation costs involved in restoring your business’ name to its former glory.

It might be wise to also invest in cybercrime insurance alongside cyber liability insurance. The former covers you for loss of funds, notification costs, data restoration fees, and legal expenses due to many cybercrimes.

 

What Are Cybercrimes?

The Royal Canadian Mounted Police defines cybercrime as any criminal activity with a cyber element such as tablets, computers, and smartphones. However, they categorize cybercrimes under two main umbrellas as follows:

  • Technology-as-Instrument — With this type, the crime is committed using digital devices, computers, and networks, such as mischief of data and unauthorized computer use.
  • Technology-as-Target — Here, IT plays a prominent role in committing a crime like fraud, extortion, and identity theft.

Some specific cybercrimes covered under the additional cybercrime insurance includes:

  • Phishing — Phishing is when you are contacted by phone, text, or email by someone claiming to be a legitimate entity to trick you into giving away sensitive information like baking details and passwords. Once they gain your information, they’ll use it to access your accounts, resulting in significant financial loss and identity theft.
  • Hacking — Hacking is the process of finding and exploiting a digital weakness in a computer system or a network.
  • Social Engineering Fraud — The most common type of social engineering fraud is when the perpetrator tricks employees into disclosing company or client information. Phishing, therefore, is a method of social engineering fraud.

 

What Doesn’t Cyber Liability Insurance Cover?

As you have just discovered, cyber liability insurance covers you and your business for many aspects of digital crimes. However, not all policies were created equal. Most plans do not cover the below, but some insurers may offer them as additional covers at an extra cost:

  • Losses Experienced Before the End of a Waiting Period — Usually, the business interruption side of the cover comes with a time-based caveat known as the waiting period. It’s the losses your business experiences after this period that are covered, not any you suffer from beforehand. The average waiting period is ten to 12 hours. So, you lose ten to 12 hours of money, which can add up.
  • Third-Party Problems — Many policies don’t extend to third-party mistakes. If you use third-party applications or services like cloud-based storage, customer relationship management, email, or other functions, you need third-party protection too. Here at LiabilityCover, we connect you with insurers and brokerages armed with this coverage, so you never have to worry.
  • Hardware Replacement Costs — Usually, cyber liability insurance doesn’t cover the costs of replacing hardware or fixing property. While it may not seem like such a big deal, it can cause problems since buying new hardware can be more efficient after a particularly corrupt cyber attack.
  • Software Upgrade Costs — Generally speaking, it doesn’t cover acquiring the latest versions of software. If you experience a cyberattack, most policies cover the costs of restoring your system to your previous setup, even if the software is old. However, cyber liability insurance plans are available that allow you to gain the latest software following a cyberattack (within some limitations).
  • Property Damage and Bodily Injury — As the world shifts into an increasingly cyber state, it’s becoming more evident that digital attacks can cause physical damage, including bodily injury. These days, manufacturing, distribution, and shipping facilities run on computers. So, if a cyber event disrupts the process, it can cause defects to physical goods, vehicles, and more. But sadly, it’s still somewhat challenging to find cyber liability insurance that covers it.
  • Patent or Intellectual Property Infringement — Cyber liability insurance won’t cover you if someone uses, imports, or sell your patented product or process. However, you can purchase this as an extra cover.

 

Who Needs Cyber Liability Insurance?

If you are a business owner in today’s world, it’s almost a guarantee that you need cyber liability insurance. After all, the world is just becoming more digitally involved as the years go by.

As a general rule, you need the insurance if you:

  • use any cloud or computer system to store data of any kind.
  • use point-of-sale systems like Vend, Lightspeed, Quetzal, Square, Clover, TouchBistro, or EPOS Now.
  • store your patients’ or customers’ data in any sort of digital system. This includes credit card information and medical records.
  • provide hardware or software services to your clients.

 

How Much Does Cyber Liability Insurance Cost?

Live the coverage specifics, the cost of cyber liability insurance varies from business to business. Sometimes, you can get a low amount of cover within your professional liability insurance for an extra $100 to $200 per year. But if your business stores sensitive information or needs a higher limit, you need a separate policy that typically costs between $750 and $1,000 per annum.

Some factors that impact the cost of your policy include:

Your Coverage Needs and Limitations

As your coverage limits increase, your cost of insurance rises too. A business needing $5 million worth of cover will pay far more for their policy than a business needing $50,000 of cover.

 

Your Network Security

If your network is unsecured, the risk of you suffering from cyber threats like data breaches and electronic extortion is greater. To lower the cost of your cyber liability insurance, you need to prove that you work on a secure network.

To help prove this, you should do the following:

  • Set up network firewalls
  • Update your passwords regularly
  • Install up-to-date antivirus software

 

Your Claims History

You will pay more for your cyber liability insurance if you’ve made a recent cyber claim. Why? Because you’re considered to be a higher risker to the insurer than businesses that haven’t made a claim.

 

Your Profession

Medical, IT, and accountancy businesses often store a lot of sensitive data. Therefore, you should expect to pay more as it will cost more to recover from a cyber event involving a massive amount of information.

 

Data Access

The number and type of entities that can access your data and systems influence the price of your insurance. For instance, insurers may see that as an added risk if you use a third-party company for website maintenance.

Moreover, limiting access to only employees who need it helps reduce the risk and, thus, the cost of insurance.

 

How to Get Cyber Liability Insurance

Acquiring cyber liability insurance is easy with LiabilityCover as we connect you effortlessly with licensed brokers and insurers.

Our process is as easy as A, B, C. See for yourself below:

  1. You submit a request on our site or give us a call to start the process.
  2. We look through your insurance requirements.
  3. Our dedicated team of professionals connects you with a licensed insurance agent or broker that specializes in your specific industry.
  4. The broker or agent contacts you to get you on the road to the right cyber liability insurance.

 

Why Choose LiabilityCover?

We get right down to business. Our aim is to save you time and money by offering a quick, tailored insurance service, so you can gain cover and carry on with your day.

We pride ourselves on being:

Convenient

No matter where you are, you can access our service. Our online platform is super easy to use and sends your information to use as quickly as a flash.

 

Diligent

We don’t rely on guesswork. We scour the information you provide with a fine-toothed comb, allowing us to get a feel for your business and the cover you need. That way, we can be sure we only connect you with industry-specific cyber liability brokers and agents.

 

Cost-Effective

It’s easy to compare rates once we’ve connected you to the perfect licensed broker. We streamline the process, enabling you to find what you’re looking for faster, increasing the amount of money you save.

 

Frequently Asked Questions

 

Doesn’t Errors and Omissions Policies Cover Cybersecurity?

Many business owners believe that their technology errors and omissions coverage gives protection against cybercrimes. However, it doesn’t offer this protection. Instead, it helps you recover losses from technology products and services.

Cyber liability insurance protects you from the loss of private third-party information (among other events).

 

Is Cyber Liability Insurance Different from Data Breach Insurance?

Yes, it is different from a data breach insurance policy. Cyber liability insurance covers most cyber events to third-party businesses or people and your business (i.e., first-party).

Conversely, data breach insurance policies only cover the costs and financial losses associated with damage to any data you hold or maintain.

 

Do Small Businesses Actually Need Cyber Liability Insurance?

It is a common misconception that hackers and other cybercriminals don’t target small businesses. Unfortunately, the opposite is true — they target small businesses as they’re usually unsuspecting and often don’t implement proficient cyber security measures.

Therefore, budgeting for cyber liability insurance is a necessity if you don’t want to be hit by hard-to-fund costs following an attack.

 

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