Online platforms are a staple in the everyday operations of Canadian tech companies. Besides supporting momentum, however, the use of business technology is also a significant vulnerability. Consider this; no matter if it’s the famous Equifax breach in the US or the information of 15 million Canadians in the Life Labs breach, cybersecurity and professional liability are top concerns in any part of the world. Here’s a look at some of the most widespread claims Canadian tech companies face regularly.

1. Breach of Contract or Failure to Perform

Regardless of how confident you are in your product or services, delivering precisely what you promised often goes awry. That said, the most common professional liability claim is the failure to perform or not meeting the contractual obligations. 

It’s not surprising that if you make promises to a client but don’t fulfill the agreed-upon tasks, that client can hold you liable for the income they lost. Additionally, you might also face fines for bad faith. 

Canadian tech companies face significant risks — system crashes, bugs, etc. — that could pause business operations for days. It’s a must to have a robust insurance plan in your corner, including errors and omissions (E&O) policy and cyber liability coverage.

2. Negligence

Despite human error as the most frustrating and preventable cause of data breaches, it’s also one of the most common reasons. Nevertheless, clients, stakeholders, and regulators don’t care whether a violation was intentional or not. The fees, fines, and settlements can still pour in, damaging your bottom line and professional reputation.  

Typically, the reason for all the fees and fines trace back to failing to exercise the appropriate precautions and practices. In other words, Canadian tech companies that are negligent in regards to “best practices” or general oversight must rectify any financial loss they caused.

For example, a stolen laptop from an IT consultant caused a massive Candian data breach in 2013, exposing 620,000 patient files. Many individuals questioned whether it was a “best practice” to give one consultant access to that many patient files from the get-go. 

3. Theft of PII

Nearly 55% of all small businesses reported a data breach in the last year. Of those companies, half have experienced more than one data breach. Personal Identity Information (PII) and failure to prevent malicious code introduction are a massive concern for Canadian tech companies — and for a good reason, too. After all, the average cost of a data breach worldwide is $4 million. In Canada, that number skyrockets to over $6 million.

PII can be credit card information, Social Security numbers, addresses, etc. Naturally, personal data of this magnitude in the wrong hands is usually devastating. Cybercriminals often target massive organizations, such as Equifax or Yahoo!, but small and mid-market tech companies aren’t safe.

Lamentably, within six months of experiencing a cyberattack, approximately 60% of smaller companies are out of business. 

4. Copyright Infringement

Bells from the Oracle v. Google case rang across the globe. The lawsuit lasted for years and cost billions in damages. To summarize the situation, Oracle claimed that Google ran a program similar to the Java platform, thus, infringing on Oracle’s product patent. 

As imagined, copyright infringement isn’t only reserved for global giants. Canadian tech companies can worry about their software, too. Keep in mind; these claims can go both ways. Your company might infringe, and it might be infringed upon. Encroaching on someone else’s copyright isn’t uncommon. But insurance coverage can help to end infringement, collect appropriate damages, and cover legal costs.

5. Defamation in Online Content 

Some Canadian tech companies allow their users to pass along information about their sites, such as comments, blog posts, etc. Strangely enough, these companies are often the same ones who file lawsuits against the initiators of slander, libel, or smear campaigns. But this scenario isn’t always the case. 

The bottom line is that communicating a false statement makes you liable for reputational damage, lost income, etc. Even if you didn’t personally produce the harmful content, you could go to court merely because you’re the responsible platform manager.

Operating in the US

Canada doesn’t have a federal health data breach notification requirement like the US does. However, Canadian provinces have their own rules and regulations. Some of these are quite outdated, but Canadians still view reporting a breach as a positive strategy to follow.

For example, the Health Information Act (HIA) of Alberta encouraged healthcare officials in 2013 to report the massive 620,000-patient data breach involving Medicentre Family Health Care Clinics in Edmonton. Although the organization waited for months to notify anyone, HIA served as the organization’s guideline when they finally reported the incident as a matter of good policy. 

Operating in the US means understanding regularly revised rules, such as the HIPAA breach notification rule, which is currently under review. Naturally, healthcare isn’t the only industry needing protection. However, acknowledging and comprehending American online data regulations is a surefire way to land success in the US. 

As a developing Canadian tech company, you face many challenges. Though, knowing the most significant risks can help you protect your future better. Working with seasoned insurance professionals arms you with valuable insight into specific industry risks and innovation solutions.

Understanding the details of what coverage your company needs can be a confusing process. Founder Shield specializes in knowing the risks your industry faces to make sure you have adequate protection. Feel free to reach out to us, and we’ll walk you through the process of finding the right policy for you. 


Want to know more about E&O or cyber insurance? Talk to us! You can contact us at ​info@foundershield.com​ or create an account ​here​ to get started on a quote.

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