It might feel like cybersecurity risk is only for the big companies. After all, they’re the ones making headlines. But according to the Cybersecurity and Infrastructure Security Agency, the U.S. agency responsible for protecting critical infrastructure from cyber threats, there’s a ransomware attack every 14 seconds. And the U.S. Small Business Administration reports that 43% of cyberattacks target small businesses.


Commercial auto, property and liability insurance are the staples of every business risk portfolio. Most business owners wouldn’t consider doing business without them. A hack can be just as devasting as a fire. Yet only 17% of small business owners reported having cyber liability insurance, according to a recent study by AdvisorSmith.

The expense of restoring corrupted computer files, replenishing lost income due to business interruption and paying ransom demands is enough to cut into your profits. Add the costs of notifying clients about the breach, paying for credit monitoring, defending yourself against inevitable lawsuits, paying federal and provincial fines, and remedying your tarnished public reputation, and you’ve got a recipe for bankruptcy.


Reboot your risk management portfolio and discover how cyber insurance can protect your business income and help you recover after a cyberattack.


Even a minor data breach can ruin your business

If a breach exposes personal data, you could be required to offer free credit monitoring services for up to two years. Credit monitoring services can cost $10 to $30 a month per individual, and that adds up.

For example, if you’re found liable for the breach of 2,000 accounts, the cost to comply with credit monitoring services starts at $240,000. Since cybersecurity and data protection laws exist in nearly every province, credit monitoring isn’t something you can ignore. If you have international clients or vendors, your risk just got risker. Most countries have cybersecurity legislation, which means more penalties and the added complication of international lawsuits.

Even if you manage to escape a lawsuit, the out-of-pocket cost of credit monitoring services and government fines could devastate your business.

What does cyber liability insurance cover?

Some insurance companies distinguish between cyber liability and data breach insurance, but often it’s
just a difference of terminology. Cyber liability insurance covers things like:

Cyber liability options in detail

Once you understand your options, it’s easier to make informed decisions. Take a deeper dive into the cyber liability pool with the information below.

Cyber liability coverage:What it’s for:
Forensic investigationsCosts related to computer forensic analysis. Forensics can reconstruct how a data breach occurred, identify the stolen data and assist with restoration. (Data reconstruction might be a separate endorsement, so check with your broker.)
Litigation (defense) expensesDefense costs related to the data breach. Check the limits and the wording. Legal bills might exhaust your coverage before your claim is completed. You might want to get excess or umbrella coverage.
Regulatory defense expenses or finesExpenses associated with federal and provincial laws. You might have to defend yourself in civil court and pay fines or penalties for noncompliance with existing data protection policies (like the Personal Information Protection and Electronic Documents Act).
Cyber event response coachingProactive consultation. Depending on the policy, you might get free, proactive advice from a data response coach (usually a lawyer) on compliance and security to prevent a breach. Check with your agent about this valuable coverage.
Crisis management and reputational damagePublic relations and customer notification. You’ll incur costs to notify customers about the breach and provide free credit monitoring services. You’ll also have to release statements about how you’re handling the incident and the steps you’re taking to prevent a future breach. You’ll probably need a company to do these things for you. (Some policies have a complimentary service, while others reimburse your expenses.)
Business interruption and lossesLost business due to a security breach. If a malignant hacker takes down your website or ordering system, your clients (and vendors) won’t be able to do business with you. Depending on the hack, you could lose weeks of revenue while restoring your systems.
Cyber extortion and ransom demandsNegotiations. If a nefarious hacker locks you out of your network and encrypts your data, you’ll need help negotiating the demands. (Think about losing the use of your email, client relationship manager, website, e-commerce, proprietary data, ordering systems, fleet tracking or GPS.)
BettermentsUpgrade after an attack. A betterments endorsement can help offset the cost of replacing hardware or software after a covered data breach. After the attack, you’ll probably need the upgrades to correct any vulnerabilities. You might even be required to make the upgrades as part of your claim settlement.
Post-breach first partyHelps when your system is breached. It can cover data restoration, client notification and forensic analysis (for proof of the attack and how it happened).
Post-breach third partyHelps when your client’s system is breached and they sue you for it. It can cover your legal defense costs or forensic analysis to prove (hopefully!) you weren’t the weak link that caused the breach. It’s an asset to freelancers and businesses working inside their clients’ systems.
Extended reporting period (ERP)Extends the dates of coverage for reported claims. An ERP allows you to extend the dates that your insurance coverage will respond to a claim. It can be useful if you think you might have a claim reported against you after your policy has ended.
Claims-made basisClaims are covered only if the claim is reported within the dates of the policy. A claims-made policy covers claims reported during the policy period or within the ERP. Check the declarations page of your policy for coverage dates and extensions.
Per-occurrence basisClaims are covered based on the date of the event. Per occurrence covers incidents that occur during the active policy dates, even if reported years later. It’s unusual for a cyber policy to be on a per-occurrence basis.

The cost of a cyber policy

Cyber liability insurance is priced based on your business risk exposure. Companies that process payment information or store personally identifiable information are at the higher end of the price spectrum. Cyber insurance is highly customized, so you can design coverage to suit your needs and budget. Depending on the deductible and your business risk rating, you could get $1 million in coverage for less than $2,000 per year. (Not too bad when you weigh it against the cost of mandated credit monitoring services.)

Your broker can help with the moving parts

Cyber liability insurance responds to many interrelated moving parts, and the policies can get just as complicated. That’s where your broker comes in. They’ll help you insure the gaps by identifying your risk exposure areas and matching you with the best policy for your risk level. Call your broker. They’re happy to explain the details (no tech experience required)!

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