Since the history of cyber insurance can be traced back to the first security liability policy written in the spring of 1997, cyber security liability insurance is more important now than it has ever been. Every business, regardless of its size or the industry; they all face potential cyber threats. From sophisticated hacking attempts to simple human errors, vulnerabilities can expose businesses to significant operational disruptions, financial burdens and potential legal actions. Beyond the immediate damages, a cyber breach can erode the trust and confidence of your clients and partners place in your organization, potentially impacting relationships and revenues for years to come.
Cyber security liability insurance isn’t just a safety net whereby one can relax; it’s a cornerstone of a responsible and forward-thinking business strategy. Our cyber insurance partners don’t just stop at the cyber risks our clients face today, but with their help, they continually stay on top of emerging cyber threats by developing new products that protect our clients from cyber risks as they emerge.
Cyber security liability insurance can provide coverage for costs and expenses related to a number of cyber threat scenarios including, for example, suspected network intrusions and cyber extortion threats, data breach, network or security wrongful acts, denial of service and network outage situations.
First-Party vs. Third-Party Cyber Insurance:
Cyber exposures can be separated into first-party and third-party risks, which require different types of coverage to be dealt with effectively. Below, we discuss the difference between first-party and third-party Cyber Insurance and how they help modern organizations mitigate different types of cyber exposures.
First-Party Cyber Coverage
In response to the growing concern over cyber-crime, insurers began offering first-party Cyber coverage in the mid 2000’s to protect businesses from the losses and expenses incurred from such incidents. It’s called “first-party” insurance because it covers only the insured’s costs and not those of affected stakeholders or other third parties.
A Cyber Insurance first-party coverage can help affected businesses pay for:
- Crisis management, covering expenses of hiring a public relations team to manage reputational damage after a cyber attack
- Business interruption, covering loss of revenue due to a cyber attack
- Cyber extortion fees, such as paying a ransom to restore access to data and systems
- Notification costs for informing customers, vendors, and other stakeholders affected by the cyber crime
- Forensic investigation, which includes hiring experts to determine the cause and extent of the attack
- Cost of protection services such as credit monitoring for affected stakeholders
- Data and asset recovery, which reimburses the cost of restoring damaged or lost data
Third-Party Cyber Coverage
Third-party Cyber Insurance pays for the costs associated with claims made by third parties who suffered losses as a result of a cyber-attack on an organization. Third parties can include clients, vendors, employees, regulatory bodies, and other stakeholders. This type of coverage protects a business from liability claims made by customers or other stakeholders whose personal information has been compromised due to a data breach.
Third-party Cyber Insurance typically covers the following:
- Network Security and Privacy Liability
- Legal fees, including attorney fees and court costs, if third parties sue the organization for the cyber attack
- Regulatory defense and penalties caused by noncompliance with industry or government standards
- Intellectual property coverage, including legal expenses arising from claims of intellectual property infringement
- Settlement fees and court judgments
- Payment Card Industry – (PCI-DSS) Fines, Penalties & Assessments
Protect Your Clients from Cyber Exposures with Ambush Associates
From first-party Cyber coverage to third-party Liability, the world of Cyber Insurance can be complex and confusing. Help your clients mitigate their cyber exposures and choose the right policy by partnering with Ambush Associates. With more than 40 years of experience in the insurance industry, we have made Cyber Security Insurance a “simple solution” and easy for our clients.
Cyber Insurance agents and brokers are uniquely positioned to help businesses assess their exposures and customize policies to fit their needs. We work closely with our clients to help them choose the most appropriate first-party and third-party Cyber coverage that matches their unique risk profile. By helping them pick the right policy, we can protect our clients from the devastating consequences of a cyber attack.