2018-03-20 14:55:37 Running a Business English Get the facts about cyber insurance. You most likely want cyber insurance coverage for your small business to protect your data, as well as... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Home-based-small-business-owner-evaluates-cyber-insurance-policies.jpg https://quickbooks.intuit.com/ca/resources/business/data-breach-cyber-insurance/ Assessing Whether Your Business Needs Cyber Insurance

Assessing Whether Your Business Needs Cyber Insurance

4 min read

Getting hacked isn’t usually as captivating as it looks in action movies. Your tablet gets swiped while you’re out getting coffee, and you don’t know it’s missing for a couple of hours. A virus attached to a ho-hum email you didn’t even want to read infects your trusty laptop, causing vital business information to be compromised. To guard against business losses that could happen from a data breach, it might be time to think about whether your small business needs cyber insurance.

Cyber Insurance Explained

So much business takes place online these days that business owners are really in uncharted territory when it comes to protecting against risk. Traditional insurance companies have always known what to do to help you if water pipes burst and damage your merchandise, but they haven’t always been prepared to cover losses such as a business’s reputation being damaged due to something that happened online. That’s where cyber insurance comes in. This type of policy deals specifically with the risks your business faces in cyberspace, which may include:

  • Online intellectual property theft: someone online takes content that belongs to you, that you created or paid for, such as photos, videos, or written words, and uses them to make money or damage your reputation.
  • Third-party network security issues: occur if your data, through a third-party service you use, such as a blogging platform, gets compromised in some way. Extortion: happens when your system gets hacked and the cyber criminal asks you to pay to avoid something bad happening with your data.
  • Data breaches: relates to things like customer privacy breaches, which can occur in a variety of ways, from an anonymous hack to someone you know stealing and misusing data stolen because they gained access to your account usernames and passwords.

The good thing is that cyber insurance covers these risks, which were one time fodder for sci-fi stories but are now everyday reality for business owners.

Reasons You Might Need Coverage

In the not so distant past, cyber breaches seemed to happen only to super large corporations, and details about the attacks ended up on the evening news. Now, hackers don’t discriminate, and cyberattacks happen every day to businesses large and small. In fact, some of the most damaging cyberattacks happen to small business. If you just got your business up and running, you probably lack the money to cover any damages that might occur due to a cyber crime. That’s one compelling reason to get cyber insurance, and there are others.

It’s perfectly normal to have faith in the online services you use, such as the background check service you use and even your favourite social media account. But just like you, those services face the same vulnerabilities, which means if they get hacked, your data gets hacked, too. Something to keep in mind is that some cyberattacks happen quietly behind the scenes, and acting fast stops them in their tracks. The worst cyber crimes, though, are those that impact your customers, clients, or employees. For example, some cyberattacks involve hackers accessing your contacts and sending emails or making calls you don’t authorize. In some cases, your contacts might incur losses if the hackers are able to get money out of them.

What a Cyber Insurance Policy Covers

So what kinds of losses does cyber insurance cover? Well, if your customer or client data gets compromised, they might not want to do business with you anymore. You know this has happened if your sales go down after a security breach. And if you get sued because of a cyberattack, you have to pay legal fees, even if you’re found not to have done anything wrong. Then there’s reputation damage. This is a tricky one for traditional insurance companies to evaluate. How do you show that someone saying untrue things about your business, products or services has made you lose money? Cyber insurance makes it possible to get reimbursed for lost sales and legal fees. Some of the costs to repair damage from cyber crimes can actually go into preventing future crimes from taking place, which is a good thing. For example, if your system gets hacked, your coverage can take care of losses plus the cost of setting up more secure systems to protect your data. Coverage might also apply if you have to shut down operations while recovering from a cyberattack.

Companies Offering Cyber Insurance

Canadian businesses have many choices when it comes to cyber insurance companies. Thinkinsure, Ridge Canada Cyber Solutions, and the Great American Insurance Group are a few on a growing list of companies offering cyber insurance to a wide range of businesses. What you might do is assess your cyber insurance needs and look at the cost of maintaining a policy. Many of the insurance companies offer policies tailored to the industry you’re in, so if your business is focused mainly on social media, the policy you choose might be different than one created for companies that do software development.

An ounce of prevention is worth a pound of cure. Do people still say that? Probably, because it’s true. Getting a cyber insurance policy early on makes it possible for you to sit back, relax and focus on growing your business.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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