Why your business needs data breach insurance
3 minute read
Cybercrime is on the rise in Canada, and your business may be at risk for financial losses as a result of data breaches. Data recovery can be expensive, and unless you have insurance coverage for this, it will be paid out of your pocket. Protect your company from financial loss by having good cyber insurance.
How can a data breach lead to financial loss?
A data breach is a form of cybercrime, and many Canadian businesses are at risk. Cybercriminals are constantly updating their techniques and tools to gain access to your business, your personal data, and your customers’ data to exploit it by selling it or holding it for ransom. Once your data has been breached, you may have to pay to get the data back and you will be responsible for any legal fees pertaining to government violations, as well as any lawsuits from affected customers.
Many business owners think that cyber insurance is too expensive, however, the cost of a data breach can very quickly exceed your insurance premium. Over 85 per cent of companies in Canada were victims of cyber-attacks in the span of one year, and according to Statista, the average cost of a data breach in Canada is 5.13 million USD (7.05 million CAD). This includes the cost of legal fees, compensation, business interruptions, as well as damage to your business’ reputation.
Potential legal fees
If your business is a victim of a data breach, this can be a very costly event, especially when dealing with potential legal fees. Depending on the circumstances of the breach, you may also need to hire legal representation for your business in the event of a lawsuit.
A data breach doesn’t just affect your business, it can also negatively impact your customers, which means you are at risk of being sued because you failed to protect their sensitive information. If there are multiple lawsuits, this can be very expensive for your business, and if you don’t have the proper cyber coverage, it can be a loss that your business may find difficult to recover from.
Compensation for affected customers
Your customers have put their trust in your business; trust that you will keep their important private information safe. A data breach could put their personal and sensitive information at risk. Businesses without any form of cyber insurance will be solely responsible for responding to these lawsuits, and if necessary, make payments themselves.
Cost of investigation
Your business may not just be responsible for paying for legal fees and compensation, but also paying for the data breach to be investigated. Data breach investigators will need to identify where your business was breached, what stored electronic data and software have been compromised, and the costs required to replace or restore them. Cyber insurance may help your business cover some of these costs.
Reputational damage
Financial losses from a data breach can also be caused by a damaged reputation. Your customers put their faith in your business and trust that you will keep their information safe. If you suffer from a cyber-attack, you may not be directly responsible, but it is your responsibility to keep your data safe. If this were to happen, it could make it hard for customers to trust your business again, and they may choose to take their business elsewhere.
Business downtime
Interruptions to your business’ day-to-day operations can be costly, and thus, you’ll want to avoid them. However, data breaches need to be investigated and network repairs need to be completed. All of this could force your business to remain closed until the recovery process has taken place. This can be detrimental to the earnings and reputation of any type of business.
How can data breach insurance help?
Having data breach insurance may help your business cover the costs associated with a data breach so that your business can get back to business as quickly as possible. This type of insurance can typically cover expenses relating to data recovery, legal expenses, cost of investigation, reputational damage, business downtime and compensation for affected customers.
Protect your company with TruShield Insurance
Having tailored insurance solutions and knowing your business is protected against unexpected events allows you to focus on what you do best – delivering exceptional services to your clients. Find out more about how TruShield can help protect your business by visiting our Cyber Risk and Data Breach Insurance Page today.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.
