As more and more business operations move online, cyber crimes become more of a threat. Cyber attacks are no longer isolated to large corporations–even the smallest businesses can be targets for cyber crimes. With the average data breach costing businesses millions of dollars, one attack can be all it takes to bankrupt your company or ruin your reputation.
A comprehensive cyber security plan is essential to protect your business against online threats. Cyber security starts with educating your employees and installing protective software, however, to fully protect your business you should consider adding cyber insurance coverage to your business insurance policy.
If you are considering cyber insurance for your business, this article will provide all the information you need as you start researching cyber insurance policies.
What is Cyber Insurance?
Cyber insurance is a specialized coverage for businesses that protects against expenses associated with cyber threats like data breaches or cyber extortion. Cyber insurance is usually a separate stand-alone coverage that businesses can purchase to complement traditional business liability insurance.
It is important to note that cyber crimes are typically not included in commercial crime insurance, and cyber insurance is required to protect your business against losses resulting from cyber-attacks.
What Does Cyber Insurance Cover?
Cyber insurance can cover the range of expenses that can come from internet-based attacks. This includes costs associated with:
- Loss of data
- Unauthorized access to data
- Cyber extortion–such as ransomware attacks threaten to block or compromise data unless payment is made
- Business disruption due to cyber attack
- Legal representation and litigation expenses
- Fines
- Costs associated with notifying or restoring the personal identities of affected customers
- Hiring a cybersecurity firm to investigate the cause of the breach, restore the affected systems, or recover corrupted data
Why Do Businesses Need Cyber Insurance?
Cyber attacks can easily bankrupt a business. The average cost of a data breach in Canada is over $7 million. Some larger corporations may be able to manage that expense without help from insurance coverage, but for most small to medium-sized businesses, one major data breach can be catastrophic.
Any business, regardless of size, can be a target for cyber-attacks. If your business has an online presence, uses e-commerce, or collects consumer data, you should consider purchasing cyber insurance.
Does Your Business Need Cyber Insurance Coverage? Start With a Self-Assessment
If your business collects personal or sensitive data from customers, patients, or clients, you should have some form of protection against cyber attacks. Sectors like healthcare, financial institutions, and government agencies are at particularly high risk of attack due to the nature of the data they collect. However, all businesses should assess their level of risk of cyber attack and consider adding cyber insurance coverage to their business insurance.
A self-assessment can help you decide if your business would benefit from cyber insurance. For help assessing the risk level of your business, don’t hesitate to consult with an insurance broker.
The more prepared you are to handle cyber attacks, the better. Cyber insurance will help pay for associated costs, but investing in cybersecurity strategies will help you manage data breaches faster and more effectively.
You can start by asking yourself a few questions:
- Does your business collect personal data or use e-commerce?
- Do you have any cybersecurity systems in place to prevent attacks?
- Do you have procedures in place to detect data breaches?
- Have you created an incident response plan?
What to Look For In Cyber Insurance Coverage
Having any cyber insurance coverage is better than none, however, there are some features that you should look out for to get coverage that best serves your needs. Check the policy details to look for coverage that includes:
- First and Third-party coverage: First-party coverage will help you restore business operations and cover loss of income. Third-party coverage will assist with legal fees, restoring damages, and notifying affected personnel.
- Worldwide coverage: If you conduct business outside of North America, consider looking for a policy that includes worldwide coverage.
- Fund transfer fraud: This will cover losses from cyber attackers accessing your business’ financial information and taking money out of your account.
- Business interruption coverage: Protect against costs resulting from a loss of operation due to a cyber attack.
What Insurance Companies Need To Know About Your Business
When you apply for cyber insurance, your insurance broker will require some information about your business to assess your risk of experiencing a cyber attack. If you can demonstrate that you are well prepared to manage cyber threats, you may receive a cheaper insurance premium.
You should be prepared to provide the following information:
- Description of your operations–e.g. Who your customers are, how many employees you have, breakdown of your revenue, etc.
- When was your last security or privacy audit? Did you implement all the recommendations?
- Does your business have a Chief Privacy Officer or Chief Information Officer?
- What information do you collect? Do you need to collect it?
- What cybersecurity measures do you currently have in place?
- What is your annual budget for cyber protection?
Protect Your Business with Cyber Insurance from Orr Insurance
For businesses of all sizes in Southwestern Ontario, Orr Insurance can help you assess your risk of cyber attack and explore your options for cyber insurance.
Orr Insurance has been protecting businesses in Ontario for over 125 years. They are committed to their community and take pride in doing everything they can to protect your business and your family.
As your partners for insurance, you can trust Orr Insurance to offer the highest standard of service for your business. Get in touch to request a quote or consult with a broker about their cyber insurance offers.