When it comes to cyber liability insurance, creating a comprehensive policy can be a bit daunting. Exactly what kinds of coverages will you need? What is most important? And what does it all mean?
Creating the right cyber liability policy should always include a few things such as network/information security, defense expenses, as well as business interruption expense coverages. Your business should also have first party and third party coverage. But what are first and third party coverages? And how will they help protect you and your company? Let’s take a look at the differences in each policy:
First Party Cyber Liability Coverage
First party coverage refers to the type of insurance that would help with business interruption expenses. Areas this type of insurance includes coverage for are:
- Notifying clients of the security breach.
- Hiring a PR firm to help restore the company’s reputation.
- Purchasing of credit monitoring services for any customers affected.
- Payouts to cyber extortionists or cyber terrorists.
Third Party Cyber Liability Coverage
Third party coverage will cover the people that are “responsible” for the systems that allowed the data breach to happen. There are several different scenarios in which third party coverage would be essential to have:
- Failure to prevent transmission of a virus to a third party or a security gap in software.
- Failure to keep confidential information secured.
- Misuse, disclosure or theft of confidential information.
In our litigious society, no person and no business is safe from being included in a lawsuit. That is why when creating your unique Cyber Liability Insurance policy, it is important to include both first party and third party coverages, as well as errors and omissions insurance. Even contracted workers are still at risk for being included in a data breach claim! And as they say, better safe than sorry!