First-Party versus Third-Party Cyber Coverage

What is First-Party Cyber Coverage?

First-Party cyber coverage is liability insurance that can help small businesses protect themselves against cyberattacks. The financial impacts of cyberattacks can be significant, so it is very important to make sure that your small business is protected against the potential financial burden of cyber attacks. First-party liability insurance serves as a means of helping a small business financially if they encounter issues. First-party coverage can cover the following:

• Reimbursing lost revenue
• Loss or destruction of data
• Accidents that could result in loss of data
• Building up the company’s reputation after a data breach

How is First-Party Coverage different from Third-Party?

Third-Party cyber coverage protects the company in case the company makes a mistake that could result in a cyberattack. Essentially, third-party coverage is what would protect companies from potential lawsuits that they could face. Third-party coverage is the coverage for businesses that are responsible for other’s online security. It refers to the business’ partners, clients, or vendors. Third-party coverage can cover the following:

• Helping build back the business’ reputation
• Covering the fees of potential lawsuits
• Working through settlements with clients after a breach occurs

What coverage is right for your business?

In order to better understand what type of coverage your business needs, it is important to understand what risks your business might be facing in the future. The type of data that your business has to protect is important to understand when determining the level of risk. Additionally, it is important to consider outside factors and other precautions that have been taken in order to protect your business and its information. Information stored electronically can be sensitive and any breach would be detrimental to the business. Whether or not your business experienced breaches in the past, it is in your business’ best interest to invest in cyber security coverage. It’s not a matter or if a data breach will occur, it’s a matter or when.