Credit reference services or bureaus have a lot of responsibility, which leaves plenty of room for error. Among these responsibilities, credit bureaus must handle and manage large data that include consumer information. Most of this information is stored in online databases, making it vulnerable to cyber crimes. If at any time one of these databases is breached, all of the information stored in it will be stolen. While there are only a few Canadian companies that have had their databases breached, the damages are extensive.
Credit reference services are responsible for gathering and maintaining credit records of all Canadian consumers. Every time a consumer applies for credit, the lender will request a copy of the customer’s credit report. This information is available only through credit bureaus. If at any time, the credit bureau provides a lender with the wrong information, they will be at risk of a negligence claim or civil lawsuit.
Professional liability insurance or PLI insurance protects credit references services from suffering a major financial loss associated with negligence claims and civil lawsuits. Depending on the coverage amount, the insurance may cover all litigation fees, settlements or monetary judgments related to the case.
Errors and omissions insurance is a requirement for all credit reference services operating in Canada. The coverage amount will depend on the level of exposures and risks. To determine the monthly premium, you will need to contact a credit bureaus professional liability insurance broker. It is recommended to combine professional liability insurance with commercial general liability insurance (CGL) to be fully protected.
Additional Coverage Options
When it comes down to it, all credit reference companies, professional liability insurance can help cover expenses related to third-party negligence claims and civil lawsuits. Knowing your risks will prompt you to immediately get covered. And, may even prompt you to acquire additional insurance coverage.
General Liability Insurance
CGL, also known as business liability insurance, protects credit bureaus in the event of property damage, physical injury, advertising and personal injury that occur as a result of business operations. If your company is sued for slander or libel, commercial liability insurance will kick in and help prevent a major financial loss. If you are familiar with civil lawsuits related to negligence, you probably know that they do not often offer a favorable outcome for businesses. However, the outcome will be more favorable, if you are fully covered by a quality CGL policy.
Commercial general liability insurance will also cover part or all of your litigation fees. You should know by now that civil litigation attorneys in Canada can charge between $150 and $250 an hour for their services. Even though your credit bureau is profitable, it will be difficult to move forward after suffering such a loss.
CGL Insurance Limit Recommendations – $500,000 per claim/$2,000,000 aggregate
Cyber Insurance
Most Canadian credit reference bureaus utilize the Internet for business purposes. From communicating with consumers and businesses to receiving, gathering and retaining data, all of these tasks can be done much easier online. While the Internet offers convenience to credit bureaus, conducting business online can also be very risky. Hackers work around the clock to obtain consumer information illegally. If your network or database is vulnerable to cyber hacks, your company will become the hacker’s next victim. Cyber insurance will help protect your company from financial loss associated with third-party negligence claims and civil lawsuits. Without this insurance, you may be forced to pay millions of dollars out of pocket.
Cyber Insurance Limit Recommendations – $100,000 per claim/$1,000,000 aggregate
Commercial Property Insurance
Owning and operating a credit bureau is a lot of responsibility. And, one of these responsibilities is protecting your company from financial loss due to damage sustained during a natural disaster. Commercial property insurance is a requirement for all credit reference services operating in Canada.
Commercial Insurance Limit Recommendations – $100,000 per claim/$2,000,000 aggregate
Cost of Insurance
- Professional Liability Insurance – $40 per month, depending on the coverage amount
- Commercial General Liability Insurance – $60 per month, depending on the coverage amount
- Cyber Liability Insurance – $12 per month, depending on the coverage amount
- Commercial Property Insurance – $15 per month, depending on the coverage amount
Please feel free to contact our office to request a free quote and learn about how to get business insurance. All this information is also available through our website.
