Businesses that handle sensitive customer information (e.g., credit card information, personal details), a data breach could result in both financial and reputational damage. Cyber liability insurance helps protect you against the costs of such a data breach.
Even for a small business, a data breach lawsuit could run into tens of thousands of dollars. The costs could include legal fees and damages for your clients (e.g., if their bank accounts get hacked). Furthermore, there would be costs associated with notifying your clients of the breach and hiring a PR firm to minimize the reputational damage, not to mention the massive management distraction. This single incident could be pose a ruinous financial burden on a small business if no insurance is carried. Fortunately, Cyber Liability Insurance could cover most of these costs, allowing the business owner to focus on leading the business.
You can choose from two types of Cyber Liability Insurance. First-party insurance covers the business for immediate costs related to the incident, while third party coverage helps pay for lawsuits brought on by customers or other parties. Many businesses choose to purchase both to ensure they are fully covered in the case of a cyber incident.
Who needs Cyber insurance?
In our view, most companies should carry some form of Cyber Liability Insurance. Almost all startups and small businesses handle some form of customer information, such as credit card details, medical information, or personal details. A single mistake or incident could put the whole company in jeopardy. Something as simple as accidentally emailing a customer list, stolen iPhone or misplaced documents could result in huge lawsuits. Combining solid security practices and vigilance, with a well crafted Cyber Insurance Policy is the best way to protect your business.
What is covered?
Cyber Liability is a relatively new type of insurance, and so specific coverages could vary. However, listed below are the common types of coverages provided.
First-party cyber liability insurance could cover…
- Investigation of a potential breach
- Legal costs related to understanding necessary actions (e.g., notifying customers, filing with the regulator)
- Offering credit monitoring services to customers
- Advertising and public relations costs to manage the reputational impact
- Extra expenses and lost revenue/profits
Third-party cyber liability insurance could cover:
- Legal fees for your defense
- Settlements and damages related to the incident
- Liability to associated with reissuing credit cards or other IDs
- Regulatory filing costs, as well as fines and penalties
Talk to us about which cybersecurity insurance coverages are right for your business.
- Read more: Overview of cybersecurity insurance
- Read more: Seven steps to buying cybersecurity insurance
- Read more: Five critical elements to check in your cybersecurity insurance policy
- Read more: 4 steps to reducing your cybersecurity risk
Zensurance is Canada’s leading online commercial insurance broker. We offer a full range of insurance products to small businesses, with a particular focus on startups. We understand what it is to be a startup, and know the most common risks of which you should be aware. Based on that (and a lot of analytics), we recommend the ideal insurance coverage for your business.