Cyber insurance can protect businesses hit by hackers

Cyber attacks on large corporations and government agencies garner headlines, but small businesses are just as vulnerable. Cyber insurance can be an important component of protecting your company. In this post, we discuss what to look for in coverage.

A report by the Business Development Bank of Canada found that 16 percent of small businesses and 28 percent of medium-sized companies say they have been targeted. Sure, it may be more lucrative to launch a ransomware attack on a big corporation, but small firms are more vulnerable because they often lack sophisticated defences.

In a ransomware assault, criminals lock your computer network and won’t release it until you pay. Phishing scams allow thieves to access your vital customer data. These attacks can be costly. According to the BDC, 30 percent of victims reported costs of more than $50,000.

“There are three components to a robust cyberdefence,” says James Braunstein of Toronto-area IT security experts apii. “First, your systems must be able to detect attacks before they do any damage. Second, your staff must be trained to watch out for and avoid phishing schemes. Third, insurance can help you get back on your feet if you are hit.”

When shopping for cyberinsurance, check with your broker to see what it will cover. Sometimes businesses wait until after an attack to see what their insurance includes – and discover that their insurance was not as comprehensive as expected. Some of the key elements are:

·        Legal costs and possible damages sought by customers

·        Professionals to negotiate with cybercriminals and potentially pay ransom

·        Repairs to your network and software

·        Business interruption costs during and after an attack

Typically, cyber insurance won’t cover vandalism by your own employees and damage due to a power surge or outage.

So how much does cyber insurance cost? It depends on the size of your company and the nature of your business. If you have thousands of customers and store their data, the risks are higher – and the insurance cost will be too. For a small- or medium-sized business, the price will be between $750 and $1,000 per year.

Contact your insurance broker to learn more about cyber insurance. Be sure to ask questions about what your policy includes.  

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