Is your business ready to tackle the ever-growing threats posed by cybersecurity breaches?
While staying updated with the latest technologies and industry trends is vital, it’s equally crucial to ensure that your business is equipped with the most suitable cyber liability insurance—a kind of invisible shield safeguarding your business from potentially catastrophic losses. However, to optimize its protective capabilities, an understanding of cyber liability insurance is very important.
This article will explore key considerations when seeking cyber liability insurance. But before diving into that, let’s establish a clear distinction between first-party coverage and third-party coverage.
First-Party Coverage and Third-Party Coverage
In the contemporary business landscape, having cyber liability insurance is imperative. Insurers have introduced two types of cyber liability insurance to aid businesses in promptly responding to and recovering from data breaches: first-party coverage and third-party coverage.
Here’s a breakdown of the differences:
Coverage Focus
First-party coverage:
- Safeguards the insured business.
- Shields the insured business against losses and expenses resulting from a data breach.
Third-party coverage:
- Focuses on potential liabilities of third parties (customers, clients, and business partners).
- Covers claims for losses of third parties due to the insured business’ cyber incident.
Costs Covered
First-party coverage:
- Deals solely with the insured’s direct costs.
- Reimburses for loss of revenue, forensic investigations, data restoration, public relations and customer notification services.
Third-party coverage:
- Covers legal expenses of third-party businesses.
- Addresses cyber-related liabilities such as data breaches, privacy violations and defamation.
Business Reputation Reparation
First-party coverage:
- Pays for engagement of public relations firms.
- Restoration of brand image of the business after a cyber incident.
Third-party coverage:
- Primarily focused on managing legal aspects.
- Concentrates on defending business against claims and settling third-party disputes.
Who Benefits from the Coverage
First-party coverage:
- Directly benefits the insured business
- Provides protection to the insured business against losses resulting from cyber incident
Third-party coverage:
- Benefits third parties.
- Provides direct protection to those affected by a data breach suffered by the insured business.
Key Considerations When Selecting Cyber Liability Insurance
Coverage: Ensure the policy provides thorough protection customized to address the cyber risks specific to your business.
Limits: Assess the coverage limits to effectively manage potential expenses linked to a cyberattack.
Exclusions: Examine the policy details to identify exclusions, preventing any vulnerabilities in your coverage.
Incident Response: Confirm that the policy incorporates provisions for creating and executing a personalized cyber incident response plan.
Price: Conduct a comparison of policies, taking into account costs and unique features to ensure alignment with your business requirements.
Reputation: Perform a thorough assessment of the insurance company’s reputation, seeking evidence of prompt claims settlement and positive feedback from customers.
Building a Resilient Future
Securing the right cyber liability insurance for your business can be challenging. For assistance in navigating this complex landscape, reach out to dedicated team at Claritech. Let’s work together to build a strong future for your business.
For more information, click here to download our free cyber insurance checklist.
