First-party cyber insurance refers to coverage for the business’s direct losses and expenses after a cyberattack, such as lost revenue, public relations support, and costs related to the recovery of lost data. Meanwhile, third-party cyber insurance is liability coverage that can step in to prevent a lawsuit or handle the costs associated if a business is sued by customers affected by a data breach. It may also cover upfront payments to consumers, settlements or fines, and damages ordered by a judge.
If an enterprise’s cyber insurance policy doesn’t include both first- and third-party coverage, your organization may be underinsured, potentially resulting in significant — and unnecessary — out-of-pocket costs, depending on the types of losses they experience in the event of a cybercrime, Tate explains.
Many cyber insurance policies automatically include both first-party and third-party coverage, but some insurance companies only offer them separately, Tate warns. “The Hartford, for example, sells multiple cyber insurance products, some of which bundle both coverage types together and some of which include only one or the other, which may be confusing for enterprise insurance shoppers.”
