Reasons you need cyber insurance | HSB Canada (2024)

FAQs

Why do people need cyber insurance? ›

A cyber insurance policy helps an organization pay for any financial losses they may incur in the event of a cyberattack or data breach. It also helps them cover any costs related to the remediation process, such as paying for the investigation, crisis communication, legal services, and refunds to customers.

First-party cyber liability insurance protects your own business from the direct financial costs that a data breach or cyberattack can have on your business. This includes recovering data, notifying customers, and providing credit monitoring services for affected customers.

While more important for companies with digital presences, any business with computers connected to the Internet is vulnerable to cyber risks such as malware/viruses, denial of service attacks and data/privacy breaches.

An employee inadvertently downloaded a destructive computer virus onto the company's network, resulting in widespread data loss and transmission of the virus to a client's computer network. The client sued the company, contending it should have prevented transmission of the virus.

2. How do I know if I need cyber insurance? If you own a business that collects or stores sensitive information, such as customer/supplier data or financial information, you may be at risk. Cyber insurance can help protect you from the financial consequences of a breach of these data and a disruption of your business.

Loss of value through intellectual property (IP) theft

Often, they won't recognize IP theft until long after an incident (for example, when a competitor takes a new product to market). Nevertheless, devaluation due to IP theft is a loss most cyber policies don't cover.

Every business with a cyber exposure would benefit from cyber insurance—that's almost every business! Not sure if you have a cyber exposure? Businesses that rely on computer systems to carry out business operations, store data or transfer money by electronic means are at risk and should purchase first-party coverage.

Businesses that sell their products online need cyber coverage. This coverage protects sellers from claims arising from cyber and data liability as well as provides an important support system if you experience a security breach.

Cyber insurance: An imperative for the finance industry

In this scenario, to minimize cyber exposure and maintain a pre-incident state, cyber insurance must cover expenses from the time of the incident to the full recovery of the business.

From defraying costs following a potential incident to indemnification for legal fees, small business cyber insurance helps ensure protection against events like data breaches of client information and ransomware attacks.

How much cyber security insurance do I need? ›

How much cyber liability insurance does a small tech business need? Most small tech companies purchase a cyber liability insurance policy with a $1 million per occurrence limit, a $1 million aggregate limit, and a $2,500 deductible.

The data shows that 68% of middle market companies have cyber-specific insurance plans in place compared with 61% last year. Among larger companies, the increase is even more pronounced: 70% this year compared with 57% last year.

An essential part of cyber risk management, cyber insurance helps businesses respond and recover from the financial costs of a cyber event, including loss from operational disruption, remediation and recovery expenses, legal fees, reputational harm, regulatory fines and more.

One single security breach can lead to exposing the personal information of millions of people. These breaches have a strong financial impact on the companies and also loss of the trust of customers. Hence, cyber security is very essential to protect businesses and individuals from spammers and cyber criminals.

Today, the average cost of cyber claims is substantial, far exceeding the average cost of cyber premiums. And considering the proactive and reactive services on offer, it's clear that cyber insurance is more than worth the money.

A cyber security policy provides working guidelines for how your online systems and software should be used to minimise risk. It helps everyone in your business to understand the processes you have in place to protect your company, data and assets.