Is your business prepared to confront today’s growing cybersecurity threats?
Although adopting the latest technologies and industry trends is undoubtedly crucial, it is equally important to ensure that your business has the best cyber liability insurance. Think of it as an invisible shield protecting your business from devastating losses. However, to harness its full potential and ensure robust protection, it is critical to have a nuanced understanding of it.
In this blog, we'll delve into the key considerations when shopping for cyber liability insurance. But before we do that, let's first understand the difference between first-party coverage and third-party coverage.
First-party coverage vs. third-party coverage
Every business today needs cyber liability insurance. To help businesses quickly respond and recover from data breaches, insurance providers have developed two types of cyber liability insurance – first-party coverage and third-party coverage.
Here’s how they differ:
1. Focus of coverage
First-party coverage:
- Shields the insured business
- Protects against direct losses and expenses resulting from a data breach
Third-party coverage:
- Focuses on liabilities from third parties
- Covers claims made by third parties who suffered losses because of the insured business's cyber incident
2. Costs covered
First-party coverage:
- Covers only the insured’s direct costs
- Pays for revenue loss, forensic investigations, data restoration, public relations and customer notification services
Third-party coverage:
- Pays for businesses’ legal expenses
- Covers cyber-related liabilities, such as data breaches, privacy violations and defamation
3. Reputation management
First-party coverage:
- Pays for expenses related to hiring public relations firms
- Aims to restore the brand image of a business after a cyber incident
Third-party coverage:
- Primarily focused on handling the legal aspects
- More concerned with defending against claims and settling third-party disputes
4. Beneficiaries of coverage
First-party coverage:
- Directly benefits the insurer
- Provides direct protection to the insured party against direct losses
Third-party coverage:
- Benefits third parties, such as a business’s customers, clients and business partners
- Provides direct protection to those affected by a data breach suffered by the insured business
Key things to consider while shopping for a policy
Here are some key points to consider when shopping for a cyber liability insurance policy:
Coverage
Comprehensive coverage is key to reducing the impact of a cyber incident. Your business can become the victim of a data breach or a large-scale cyberattack at any time. That’s why it’s crucial to ensure that the policy addresses cyber-risks specific to your business.
Limits
Evaluate the policy to understand the coverage limits. The policy that you finalize should be able to
handle the potential costs associated with a cyberattack, including legal fees, data recovery and business interruption expenses.
Exclusions
Study the policy outlines to understand what is excluded. Any limitations in your policy can make your business vulnerable. That’s why it’s crucial to know what is not covered by your insurance.
Incident response
Make sure that the policy has provisions for developing and implementing a cyber incident response plan tailored to suit your business. Without a well-defined response plan, you won’t be able to effectively respond to a cyber incident.
Price
Before finalizing a policy, compare and cross-check various policies, especially their costs and unique offerings. Although opting for the most affordable option can be tempting, it is crucial to ensure that the coverage you choose is best suited for your business needs.
Reputation
It is also important to do your due diligence and research the insurance company’s reputation. Look for an insurer with a good reputation and positive customer feedback. Choose a company that settles claims promptly, as that is a reliable indicator of the level of support you can expect when you need it.
Build a resilient future
Finding the right cyber liability insurance coverage for your business can be daunting. However, it can be even more challenging to get a payout when you need it the most. That’s where a dedicated IT service provider like us comes in.
We can help you improve your chances of securing coverage. Reach out today, and let's build a resilient future together.
Don’t wait for the next cyberthreat to strike. Reach out to us today for a no-obligation consultation. Together, we’ll enhance your digital defenses, secure your organization’s future and prioritize your security.
