Definition
Cyber insurance
In one sentence
Cyber insurance is an insurance policy that covers financial losses from cyber incidents, including incident response, legal advice, breach notification, data restoration, business interruption, cyber extortion and liability claims from third parties.
Incident response planMulti-factor authenticationEndpoint detection and responseImmutable backup
Cyber Insurance Explained
Policies typically include first-party coverage for the organization's own costs and third-party coverage for claims made against it. Coverage for social engineering fraud, such as fake invoices, is often provided under a lower sublimit, sometimes conditional on call-back verification procedures. Most policies require prompt notice and use of the insurer's approved panel of breach coaches and incident responders.
The Canadian cyber insurance market tightened significantly after rising ransomware losses. Insurers now commonly require controls before offering coverage, including MFA on email, remote access and privileged accounts, EDR on endpoints, secure and tested backups, timely patching, email security, training and an incident response plan. Many ask about 24/7 monitoring.
Accuracy on the application matters. The answers form part of the contract, and a claim can be challenged if a declared control was not in place. For Canadian SMBs, the most productive approach is to treat the insurance application as a security checklist, verify every answer against reality and keep evidence. Brokers and policy wording are the authority on any specific coverage.
General information for Canadian organizations, not legal advice.