What Is Cyber Liability Insurance and Why Do You Need It

The Ontario construction industry runs efficiently through technology in today’s digital world. Project management software streamlines workflows, communication tools connect teams seamlessly, and online plans ensure everyone’s on the same page. However, this reliance on technology also introduces a growing threat: cybercrime.

A data breach in the Ontario construction industry can be devastating. It can expose sensitive client information, while ransomware attacks can cripple project deadlines and disrupt crucial operations. These incidents can cause irreparable financial and reputational damage, jeopardizing the very core of your construction business.

Fortunately, there’s a proactive approach to safeguarding your company—cyber insurance. But, what is cyber insurance? Let’s discuss its coverage and 

What Is Cyber Liability Insurance? 

Cyber liability insurance, also called data breach insurance, is a policy that protects your business in cases of cyberattacks affecting your IT infrastructure. It covers data breaches, remediation costs and ransom money, all of which aren’t typically covered by commercial general liability insurance most companies already have. 

It’s a supplement policy that shoulders your business’ financial losses resulting from these unfortunate cyber attacks. For instance, if your company’s network is breached and millions worth of data are stolen, your cybersecurity insurance policy will shoulder these costs so you won’t have to pay them out of pocket.

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Why Ontario Contractors Need Cyber Liability Insurance 

Knowing what is cyber insurance, you might be asking why you need it. Since 2020, cyber attacks in Canada have been rising. In 2021, over 85% of Canadian companies fell victim to cyberattacks. These attacks ranged from data breaches to ransomware. 

That’s why simply knowing what is cyber liability insurance isn’t enough—you need to get it to shield your business from financial ruin and legal repercussions in the face of a cyberattack. Cyber liability insurance provides financial support to cover the significant costs associated with a breach and offers access to expert guidance to help you navigate the legal and technical complexities of recovery.

By having cyber security insurance as part of your insurance bundle, you’re not just protecting your business financially, You’re also demonstrating proactive risk management to your clients. This can significantly boost trust and confidence in your company, leading to a potential competitive edge in the Ontario construction market.

What Does Cyber Insurance Cover? 

What is cyber insurance good for, you might ask? Here’s a breakdown of key cyber insurance coverage typically included in policies for contractors:

Data Breach Expenses 

When a cyberattack exposes sensitive client information—names, addresses, and social security numbers, a cyber liability insurance policy covers the expenses of notifying clients, retrieving their stolen data, and even paying potential regulatory fines.

Legal Fees 

Let’s say a hacker gains access to your company network and uses it to launch a cyber attack on other businesses. You could face lawsuits from those affected businesses. Cyber liability insurance can provide legal defence and help cover any legal expenses linked to such network security breaches.

Cyber Extortion Ransom 

In cases of ransomware attacks where malicious programs lock down your computer systems and demand a ransom payment to regain access, cyber insurance can cover ransom payments and the costs required to get your system up and running again (with limitations).

It can also offer guidance for negotiating with cybercriminals, potentially helping you recover your systems faster and at a lower cost.

Business Interruption 

Disruptive cyber events can lead to project delays and lost revenue. Cyber liability insurance can help offset these financial losses.

What’s Excluded in Cyber Liability Insurance? 

Cyber liability insurance doesn’t cover preventable issues brought by human error or negligence. These include the following:

• Weak security processes.
• Previous breaches prior to purchasing the policy.
• Employee error or negligence.
• Internal attacks. 

Simply said, if strong cyber defences, efficient employee training and company processes could’ve prevented the issue, the insurance won’t cover it. Only third-party attacks or issues outside of the company’s control are included.

How to Strengthen Cyber Defense? 

So how do you improve your security and prevent cyber risk? You’ll need to diagnose your current systems and see where you can improve your IT security.

Here’s a quick overview of what you can do:

1. Assess your current security processes through a third-party professional to see your vulnerabilities.
2. Implement changes as dictated by the assessment. This could mean strengthening cyber security by installing anti-malware software.
3. Get cyber liability insurance to protect yourself should these security measures fail.

Source: Canva

Protect Your Business with the Right Insurance Broker for Your Cyber Needs 

Don’t let cyber risks take down your project or hurt your reputation now you know what is cyber insurance. Cyber liability insurance acts as a safety net, protecting your business from the financial losses that can arise from data breaches, network security breaches, and even ransomware attacks.

Working with a cyber risk specialist at Contractors Insurance is key. Our experts can explain different policy options, answer your questions, and help you find the perfect policy for your construction business.

Don’t wait for a cyber event to disrupt your project. Get a free quote for cyber liability insurance from Contractors Insurance today and secure your project!