Cyber Insurance 101: What Canadian Businesses Need to Qualify for Coverage in 2025

Cyber threats are more prevalent, sophisticated, and damaging than ever before. Canadian businesses, both large and small, are increasingly targeted by cybercriminals seeking to steal data, disrupt operations, and demand hefty ransoms. As a result, cyber insurance has moved from being a niche offering to an essential component of a comprehensive risk management strategy.

Cyber insurance provides financial protection against a range of cyber incidents, from data breaches to ransomware attacks. However, qualifying for coverage in 2025 requires more than just having basic cybersecurity measures in place. Insurers are demanding that businesses adopt proactive, advanced security practices to minimize risk. If your company still relies on outdated antivirus programs without additional layers of defence, you may find it challenging to secure affordable coverage.

This guide will walk you through why cyber insurance is critical, what insurers expect, and how you can position your business to qualify for comprehensive coverage while keeping premiums reasonable.

Why Cyber Insurance is Essential for Canadian Businesses

Escalating Cyber Threats

Cyber threats have evolved dramatically over the past decade. No longer confined to high-profile data breaches at major corporations, cyberattacks now routinely target small and medium-sized businesses (SMBs), recognizing that these companies often have fewer security resources.

As a result, ransomware attacks have surged, phishing schemes are becoming more convincing, and insider threats are becoming harder to detect. Canada’s National Cyber Security Strategy reports a steady rise in cyber incidents impacting businesses across all sectors.

Financial Impact

The financial repercussions of a cyberattack can be devastating. Costs often include:

• Data breach notification expenses
• Legal fees
• Regulatory fines
• Ransom payments
• Business interruption losses
• Reputational damage

According to a 2023 study, the average cost of a data breach for a Canadian business is $6.94 million. Many SMBs cannot afford to absorb such losses, making cyber insurance a critical safety net.

Regulatory Pressures

Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA) requires businesses to report data breaches involving personal information. Non-compliance can lead to significant fines and cripple business operations. Cyber insurance often covers regulatory defence costs and fines when legally permissible, adding another layer of protection.

Key Requirements for Cyber Insurance Coverage in 2025

Businesses must qualify for cyber insurance in Canada. This can be achieved by demonstrating that they have robust cybersecurity measures in place. While this guide outlines common cyber insurance requirements, coverage terms, conditions, and eligibility criteria may vary between providers. Always consult with your insurer for specific policy details.

Here’s what insurers are increasingly looking for:

1. Strong Authentication Measures

Two-factor authentication (2FA) has become a baseline expectation. Passwords alone are no longer sufficient to protect sensitive systems and data.

2FA requires users to provide two forms of identification to gain access. This could include:

• Password
• Authentication app
• Biometric verification (face ID or fingerprint)

Why it matters: 2FA dramatically reduces the risk of unauthorized access. Insurers view the implementation of 2FA across email accounts, financial systems, cloud services, and VPNs as a critical risk mitigation strategy.

Pro tip: Deploy 2FA company-wide and enforce its use through centralized policies.

2. Advanced Threat Detection and Response

Relying solely on traditional antivirus programs is no longer enough. Insurers now expect businesses to implement Managed Detection and Response (MDR) or Endpoint Detection and Response (EDR) solutions.

• MDR: Provides 24/7 monitoring, threat hunting, and incident response by a team of cybersecurity experts.
• EDR: Uses advanced software to detect, investigate, and respond to threats at the endpoint level.

Why it matters: MDR and EDR solutions catch threats that slip past conventional defences, offering real-time detection and response.

Pro tip: Businesses with active MDR/EDR solutions may be eligible for lower premiums, as they demonstrate proactive risk management.

3. Modernized Antivirus and Anti-Malware Solutions

Legacy antivirus solutions like Norton or McAfee have been outpaced by modern threats. Insurers now look for next-generation cybersecurity tools that use:

• Artificial Intelligence (AI) to detect anomalies
• Behaviour-based threat detection
• Cloud-based threat intelligence updates

Why it matters: These tools provide faster and more effective protection against sophisticated attacks, such as zero-day exploits and fileless malware.

Pro tip: Invest in a modern cybersecurity platform that integrates antivirus, anti-malware, firewall, and endpoint detection capabilities.

4. Regular Security Audits and Risk Assessments

Insurers want to see that you take cybersecurity seriously all year round, not just during insurance renewal periods. Regular security audits and risk assessments are essential components of a proactive cybersecurity strategy. They demonstrate that your business actively seeks to identify and mitigate risks before cybercriminals can exploit them.

Key Types of Assessments to Conduct

• Internal Audits: Your internal IT or security team conducts these audits. They involve reviewing existing security controls, identifying any outdated practices, and ensuring compliance with your company’s cybersecurity policies. Internal audits should cover network security, application security, employee access controls, and data protection measures.
• Third-Party Assessments: Insurers place significant value on independent assessments conducted by certified cybersecurity firms. Third-party experts provide an unbiased and comprehensive evaluation of your systems and processes, often uncovering vulnerabilities that internal teams might miss. A third-party security assessment can include vulnerability scanning, security architecture reviews, and compliance audits for frameworks like ISO 27001 or SOC 2.
• Penetration Tests (Pen Tests): Penetration testing involves simulating real-world cyberattacks on your infrastructure to uncover hidden vulnerabilities. Ethical hackers use the same techniques as malicious actors to test your defences. These tests can be external, targeting public-facing assets like websites and VPNS, or internal, simulating insider threats or breaches from within your network.

Why It Matters

• Proactive Risk Management: Regular audits and assessments allow you to detect security gaps and address them before they can be exploited. This proactive approach reduces your overall risk profile, minimizing the chances of a costly cyber incident.
• Continuous Improvement: Cyber threats evolve rapidly. What was considered secure a year ago may now be vulnerable. Regular assessments ensure your cybersecurity practices keep pace with the threat landscape.
• Regulatory Compliance: In Canada, many industries are subject to data protection regulations, such as PIPEDA, or sector-specific requirements. Regular security audits help ensure compliance, which in turn helps avoid potential legal penalties and reputational damage.
• Incident Readiness: Businesses that conduct regular penetration tests and risk assessments are better prepared to detect and respond to incidents quickly, limiting downtime and damage.

Pro tip: Documented security audits, third-party assessments, and penetration tests strengthen your cyber insurance application. Insurers view businesses that perform these activities as responsible and lower risk, which can:

• Lead to broader coverage availability
• Help negotiate lower premiums
• Potentially increase policy limits
• Demonstrate diligence if you ever need to file a claim

5. Employee Cybersecurity Training

Humans are often the weakest link in cybersecurity. A single click on a phishing email can open the door to a significant breach.

Training should cover:

• Recognizing phishing and social engineering attacks
• Secure password practices
• Proper handling of sensitive data
• Incident reporting procedures

Why it matters: Well-trained employees are your first line of defence.

Pro tip: Companies that implement regular training sessions and phishing simulations are seen as lower risk by insurers.

6. Secure Backup and Data Recovery Plans

Backing up data is critical, but in 2025, it’s no longer enough simply to have copies of your files. Insurers want assurance that your business can recover quickly and completely in the event of a ransomware attack, data corruption, or destructive cyber event. A robust, tested backup and data recovery plan is now a non-negotiable requirement for qualifying for comprehensive cyber insurance.

Key Elements Insurers Look For

• Regular Backups: Your backup strategy should include frequent backups (ideally daily or in real-time) of all critical systems and data. Backups should be stored in multiple, geographically separated secure locations, such as a combination of on-premises devices and reputable cloud providers. This approach ensures safety even if one location is compromised.
• Immutable Backups: Immutable backups cannot be altered or deleted, even by ransomware. Insurers increasingly favour businesses that implement immutable storage solutions, providing an extra layer of protection against encryption-based attacks.
• Encryption: Simply backing up data is insufficient if those backups are not protected. Encrypt your backup data both in transit (while it’s being transferred) and at rest (when it’s stored) using strong encryption protocols. Preventing unauthorized access, even if the backup files are intercepted or stolen.
• Testing and Validation: A backup is only valuable if it can be restored with proper disaster recovery planning. Insurers expect businesses to perform regular testing of their backup restoration processes. Including simulating different disaster scenarios, from file recovery to full system restores. Ensuring that backups work as intended and meet recovery time objectives (RTO).
• Backup Retention Policies: Maintain multiple versions of backups over time. Retaining only the latest copy is risky; if that version becomes corrupted or compromised, you could lose valuable data. Clear, documented retention policies help mitigate this risk and demonstrate maturity to insurers.
• Separation from Primary Network (Air-Gapped Backups): Where possible, maintain an air-gapped or segmented copy of critical backups. Air-gapped backups are physically isolated from the main network, making them immune to many forms of cyberattacks, including ransomware that targets network-attached storage.

Why It Matters

• Minimize Downtime: Swift recovery from backups can dramatically reduce operational downtime after a cyber incident, helping your business resume normal operations quickly and reducing financial losses.
• Reduce Ransomware Leverage: If attackers know you have secure, recoverable backups, their ability to extort ransom payments diminishes. You can restore your systems without paying a ransom, which not only saves costs but also weakens the broader ransomware economy.
• Preserve Reputation and Client Trust: A business that recovers quickly with minimal disruption is better positioned to maintain client trust and avoid reputational damage after an incident.
• Regulatory Compliance: Data protection laws, such as PIPEDA, expect organizations to implement safeguards that protect data integrity. Secure backups and effective recovery processes can help ensure compliance and avoid regulatory penalties following a breach.

Pro tip: Having a documented and tested backup and recovery plan strengthens your cyber insurance application. Businesses that demonstrate resilient recovery capabilities are seen as lower risk, which can lead to:

• Lower premiums
• Higher policy limits
• Expanded coverage terms, such as coverage for business interruption losses and ransom demands

7. Up-to-date Policies and Incident Response Plans

Having comprehensive, well-documented cybersecurity policies and response plans is essential, not just for effective internal management but also to qualify for cyber insurance in 2025. Insurers view clear documentation as proof that your business approaches cybersecurity systematically rather than reactively.

Essential Documents Insurers Expect to See

• Cybersecurity Policy: A formal cybersecurity policy outlines your organization’s security protocols, acceptable use standards, and employee responsibilities for protecting company data and systems. This policy should cover:
  • Password management requirements
  • Access control procedures
  • Acceptable use of company devices and the internet
  • Data classification and handling
  • BYOD (Bring Your Own Device) guidelines
  • Regular update and patching schedules. A firm cybersecurity policy ensures that all employees, not just IT staff, understand their role in maintaining a secure environment.
• Incident Response Plan (IRP): An incident response plan defines the exact steps your organization will take to detect, contain, eradicate, and recover from a cyber incident. A good IRP should include:
  • Immediate containment and mitigation strategies
  • Roles and responsibilities during an incident
  • Communication plans (internal, external, and regulatory notifications)
  • Evidence preservation procedures for forensic investigations
  • Post-incident analysis and reporting requirements. Insurers place a high value on organizations with a well-rehearsed Incident Response Plan (IRP) because a quick, coordinated response can drastically reduce the financial and reputational impact of a breach.
• Business Continuity Plan (BCP): A business continuity plan ensures that essential business functions can continue during and after a cyber event or significant disruption. A comprehensive BCP should detail:
  • Critical systems and processes are necessary for operations
  • Alternative communication channels
  • Redundancy for key infrastructure (servers, networks, cloud platforms)
  • Recovery Time Objectives (RTO) and Recovery Point Objectives (RPO)
  • Crisis management protocols. This plan demonstrates resilience, a quality insurers highly prioritize when assessing coverage eligibility and premiums.
• Privileged Access Management (PAM): PAM restricts employees from installing unauthorized software or accessing sensitive systems without approval, reducing the risk of insider threats or malware infections.
  • Insurers increasingly require businesses to implement Privileged Access Management (PAM) solutions. 
  • Uncontrolled admin privileges are a common attack vector. PAM ensures only authorized users can perform high-risk actions.
  • Combining PAM with role-based access controls (RBAC) to further limit exposure and demonstrate rigorous access governance to insurers.

Why It Matters

• Quick, Coordinated Responses Limit Damage: When a cyber incident occurs, every second counts. Well-documented and rehearsed policies enable your team to act swiftly and decisively, limiting downtime, financial losses, and reputational harm.
• Demonstrates Organizational Maturity: Insurance providers want to cover prepared businesses, not just reactive ones. Up-to-date policies signal that your company takes cybersecurity seriously and has a governance framework in place to manage complex incidents responsibly.
• Regulatory Compliance: Many regulations require businesses to maintain documented security and incident response practices. Failure to do so could lead to fines, penalties, or increased liability, all risks insurers evaluate when underwriting a policy.

Pro tips

• Review and update all cybersecurity policies and plans annually, or as soon as possible, particularly after any significant changes to your IT infrastructure, business operations, or regulatory environment.
• Conduct tabletop exercises or simulated incident drills to test your plans and refine them based on real-world feedback. Insurers favour businesses that demonstrate not just documented plans, but active maintenance and real-world testing.

These are general best practices, but insurers may adjust requirements based on your industry’s regulatory landscape (PIPEDA, GDPR) or unique operational risks.

Factors That May Influence Your Cyber Insurance Premiums

While investing in cyber insurance is a critical step toward risk management, it’s essential to understand that premiums are not one-size-fits-all. Several key factors influence how much your business will pay for coverage, and being aware of these variables can help you take proactive steps to secure more favourable rates.

Industry Sector

Your business’s industry plays a significant role in determining your cyber insurance premiums. Sectors that handle highly sensitive data or critical infrastructure are seen as higher risk targets by both cybercriminals and insurers. 

Insurance providers may have different underwriting criteria, so businesses should compare policies to find the best fit for their risk profile and budget. Moreover, Requirements can vary significantly by industry. For example, healthcare providers may need HIPAA-aligned controls, while financial institutions could face stricter demands like PCI-DSS compliance. Always clarify your insurer’s expectations based on your sector.

• High-risk industries include:
  • Financial services (banks, credit unions, investment firms)
  • Healthcare and medical organizations
  • Educational institutions (universities, colleges, and K-12)
  • Legal and professional services (law firms, accounting firms)
  • Retail and e-commerce businesses
• These sectors often face steeper premiums because breaches can expose vast quantities of personal, financial, or health-related information, and the regulatory consequences are severe.

Pro tip: Businesses in high-risk sectors can offset higher premiums by demonstrating advanced cybersecurity measures and compliance with industry-specific regulations, such as PCI-DSS (for payment data) or HIPAA (for healthcare data).

Business Size and Revenue

Generally, the larger your business, the higher your premiums. Insurers assess larger businesses as more attractive targets for cyberattacks due to:

• Greater brand visibility
• Larger volumes of valuable data
• More complex infrastructures that present a broader attack surface

High annual revenues may also result in higher premium costs, as potential losses and payouts scale with the size and financial scope of the organization.

Pro tip: Even large organizations can keep premiums manageable by investing heavily in cybersecurity and demonstrating a strong risk management culture across all departments.

Volume and Sensitivity of Data

The type, amount, and sensitivity of data your business collects, stores, and processes directly impact your cyber risk profile. Handling:

• Personally identifiable information (PII)
• Protected health information (PHI)
• Financial records
• Intellectual property (IP)

Increases exposure to costly breaches and regulatory fines, leading insurers to charge higher premiums.

Pro tip: Employ data minimization strategies wherever possible, collect only the data you truly need, encrypt sensitive information, and implement strict access controls to demonstrate data stewardship to insurers.

Existing Cybersecurity Posture

Your company’s current cybersecurity environment is one of the most controllable factors influencing premiums. Managed Service Providers (MSPs), such as RevNet, have the expertise and knowledge to help enhance cybersecurity posture. In addition, insurers heavily favour businesses that have invested in modern, layered defences such as: 

• Multi-Factor Authentication (MFA) or 2FA across all systems
• Managed Detection and Response (MDR) or Endpoint Detection and Response (EDR) services
• Encrypted backups with immutable storage
• Regular security audits and penetration testing

Pro tip: The more proactive and comprehensive your cybersecurity measures, the more negotiating power you will have when discussing premiums and coverage limits with your insurer.

Claims History

Your experience with cyber incidents can significantly impact your ability to obtain affordable coverage:

• A history of multiple claims or major breaches may lead to higher premiums, coverage exclusions, or higher deductibles.
• Businesses with no prior claims and a proven track record of strong cybersecurity hygiene are seen as lower risk and are rewarded with better pricing and broader policy terms.

Pro tip: If your business has experienced a breach in the past, be prepared to demonstrate how you’ve improved your security posture since the incident. Insurers want to see that you’ve addressed weak points and learned from previous mistakes.

Tips to Improve Eligibility and Reduce Premiums

Here are actionable strategies to enhance your eligibility for cyber insurance and potentially lower your costs:

• Adopt a “security-first” mindset across all business functions.
• Invest in advanced cybersecurity solutions that go beyond traditional antivirus.
• Demonstrate a culture of cybersecurity awareness through regular employee training.
• Implement and enforce strong authentication measures across all critical systems.
• Document everything: Keep detailed records of your cybersecurity controls, policies, and incident response plans.
• Work with cybersecurity experts: Partnering with managed service providers (MSPs) or cybersecurity consultants can strengthen your security posture.
• Review your insurance needs annually: As your business grows and evolves, so too should your cyber insurance coverage.

Final Thoughts

Cyber insurance is no longer a convenient add-on for Canadian businesses; it’s a necessity. As the cyber threat landscape continues to evolve, qualifying for coverage in 2025 will require a proactive, comprehensive approach to cybersecurity.

Businesses that invest in modern security solutions, enforce strong authentication, train their employees, and maintain rigorous backup and incident response plans will not only be more resilient against attacks, but they will also be viewed more favourably by insurers.

Now is the time to evaluate your current cybersecurity posture, close any gaps, and prepare your business to meet the new standards for cyber insurance coverage. Consider reaching out to an MSP like RevNet to help ensure your business’s cybersecurity. Doing so will not only protect your company against financial loss but also demonstrate to clients, partners, and regulators that you take cybersecurity seriously.