What is First-Party Cyber Insurance?
Feb 24, 2021
Do I Need First-Party Cyber Insurance?
If you own a business, we know it can be intimidating to find the right kind of insurance. We’re here to help you demystify the types of Cyber Insurance. In this blog, we explain what is First-Party Cyber Insurance, when do you need First-Party Cyber Insurance, the difference between various Cyber Insurance policies and essential coverages that are not included in every Cyber Insurance policy.
What do we mean by First-Party Cyber Insurance?
The business or the entity that purchases the insurance is traditionally considered the first party. For example, if you were to rear-end someone in a simple car accident, the damage to your own car is first-party damage, and the damage you caused to other car is considered third-party damage.
Are all Cyber Insurance policies the same?
Not necessarily! Cyber Insurance is a relatively new coverage and not every policy is the same. It is important to review coverage, limits and how they interact together. If you’re unsure, we highly recommend speaking with an insurance professional or broker to review your business and to give guidance about your current Cyber policy.
Five Important Coverages That Are Not Included on Every Cyber Policy:
Data Recovery provides coverage to restore the data and network to where it was prior to the loss. This includes any data that is gone or corrupted due to a cyber attack.
Loss of Business Income
Loss of Business Income provides coverage for loss of income due to a cyber attack. This could be from Network Extortion or other cyber attacks that cause a decreased productivity, inability to deliver products or services or inability to access data.
Network Extortion covers ransom costs when there is a demand to stop a cyber attack like ransomware.
Social Engineering Fraud
Social Engineering Fraud covers fraudulent electronic communication for things like vendor or supplier imitation, executive imitation or client imitation that result in harm - including but not limited to financial losses as a direct result of fraudulent communication.
Notification Costs provides coverage for costs associated to let those affected by a security breach know. This traditionally includes things like mailing campaigns, credit monitoring or call centers to answer questions for those impacted.
But I Don’t Sell Anything Online; Do I Still Need Cyber Insurance?
Yes! As you can see with the key coverages above, online activity is a small part of the overall need for First-Party Cyber Insurance. If you rely on connectivity, like email, and/or computer systems, it’s vital to have a First-Party Cyber Insurance. Most businesses purchase some sort of Business Interruption coverage, but for a cyber attack to be covered, the business must have a First-Party Cyber Insurance policy.
We also answered what is third-party cyber insurance; check it out!
There is a good chance that your business needs a First-Party Cyber Insurance policy. A comprehensive Cyber Insurance policy will provide adequate coverage for your business and will help you have peace of mind. Our team of experts at Foxquilt can help you figure out what kind of Cyber Insurance you need for your business. You can even start an online quote for Business Insurance tailored to your unique business needs; get started on your quote with Foxquilt today!
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