What is cyber insurance?

As the world becomes increasingly digital, the risks surrounding cyber threats are growing. And as time passes, the cost of the information held by each organization becomes more expensive to replace if a breach happens. No matter what industry you’re in, your business could be vulnerable to cyber attacks. That’s where cyber insurance comes in — it helps protect your company’s reputation and bottom line.

Cyber insurance helps support your business if devices or documents are lost or stolen, or if computer networks are breached, leading to information being stolen or ransomed, business operations interrupted and computer systems corrupted.

It also helps in preparing your business before a breach happens. With cyber hygiene consultation services, risk management resources and incident response planning, your business can be better protected thanks to Cyber security professional advice included at no additional cost.

Federated Insurance Cyber protection combines first-party and third-party insurance coverage for your data stored anywhere in the world. This policy provides your business with broad protection against cyber risks, as well as access to our Cyber Assist* service at no additional cost. Cyber Assist provides consultation on proactive measures you can take to protect your data, as well as reactive assistance in the event of a privacy breach or cyber incident.

First-party coverage can protect your business from the costs that directly impact your operations, including expenses related to incident response, data recovery, bricking, business interruption, and extortion. Third-party coverage protects your business from the costs that third parties, such as your customers, incur because of your business’ cyber claim. It also provides coverage for costs related to cyber and privacy liability, media liability, regulatory expenses and PCI (payment card) assessments.

Our solution includes cyber hygiene consultation services, risk management resources, incident response planning, crisis management support, notification assistance, media relations consulting and extortion/ransomware support and negotiation.

No matter what industry you’re in, if you handle any information electronically or store your information in a filing cabinet, your data could be at risk. That’s why it’s important to be prepared.

• Hackers don’t discriminate: A Canadian Internet Registration Authority (CIRA) survey in 2022 reported that only 44% of businesses have mandatory cybersecurity training for all employees. If you operate a small business, you may think you’re less likely to be targeted, but hackers target companies of all sizes in all industries. Small and medium sized businesses account for almost half of all Canadian cyber security incidents.
• Cyber attacks are expensive – in more ways than one: If your business suffers a cyber attack, you’ll likely have various costs that pop up as you get your operations back on track. But what you may not have considered is the money you’ll lose because of business downtime. Business interruption can be costly, as your entire company comes to a screeching halt and your income stops coming in, but your employee’s salaries must still be paid. According to a 2021 Léger – Insurance Bureau of Canada survey, 58% of small businesses who suffered a cyber attack said it cost less than $100,000, while 41% said it was more than that amount.

• An employee is tricked: Say some of your employees are targeted in a phishing scheme, where fraudulent emails trick them into sending their login credentials to an outside individual. Depending on what information is shared or accessed, your company’s and customers’ data could be at risk. In response, you may need to hire a public relations firm to handle communications with the public and help to restore trust in your company. But even still, you could face a lawsuit from affected customers or incur a fine from the Privacy commissioner for not notifying them of the breach. A cyber risk insurance policy could help with these costs.
• Malware is introduced: Imagine that malware affected the computer network of a small professional services company over the weekend. On Monday, the office staff finds they’re locked out of their Customer Relationship Management system and unable to service customers or contact them to reschedule any appointments. To help restore access, IT forensics may need to be called in: they can help decrypt the computer system and determine whether any customer information was accessed or stolen. The IT forensics work performed on your computer system may be covered by a cyber risk policy. Then, depending on the results of that investigation, further actions involving a public relations firm may need to be taken.
• Business interruption: Picture this: a mid-sized manufacturer experiences a cyber breach and malware infects its computer network, including automation systems. The company’s IT department spends days recovering electronic data from corrupted storage devices and repairing the computer systems to continue operations. During this clean-up process, regular business income is lost, as the company cannot operate. But that’s not all. Because of the interruption, its customers may also experience lost income and delays of their own. This one cyber attack could be costly. As a result, the company must deal with forensic investigation, business income loss, and litigation from customers for the financial loss caused by the breach. The costs associated with all these events may be covered by cyber risk insurance.

Commercial general liability insurance:
Commercial general liability insurance, or CGL for short, can help if you’re found legally liable for bodily injuries or property damage to a third party. It can also offer protection in situations where you or your employees are conducting business offsite.

Commercial property insurance:
Commercial property insurance can help protect your physical assets, like your storefront and your warehouse. It’s also designed to help with the repair or replacement costs for tools, equipment, inventory, electronics, and other assets that are crucial to running your business.

Commercial auto insurance:
Commercial auto insurance can help if you or your employed drivers get injured in a car accident involving your business vehicle. It can also provide replacement car coverage if you need to rent a temporary car for business operations following a covered accident.

Business interruption insurance:
This coverage is designed to help you recover lost business income and cover ongoing business expenses if your business is temporarily closed for repairs due to a covered loss.