Cybercrimes are on the rise and your business needs a strong risk management policy. Insuring yourself with first party vs third party cyber insurance protects your business from the financial and legal risks associated with a data breach or other cybercrime. But what exactly is the difference between first party and third party cyber risks?
Non-IT firms generally would have coverage for first party. Typical benefits include public relations campaign launch, paying any extortion costs, obtaining services to monitor customer’s credit, notifying clients and compensating for lost business income. Most businesses have some amount of customer information stored. This puts the company at risk for a data breach.
IT businesses often require additional coverage not provided by first party cyber insurance policies. As the architects and contractors for these systems, IT firms are at greater risk since they design, implement and build the network infrastructures and software programs that were breached. Third party cyber insurance protects the company, employees and independent contractors.
Understanding the difference between first party and third party cyber insurance can ensure your business has adequate coverage in the event of a data breach. With the number of data breaches rising with each passing year, it is imperative businesses mitigate the potential financial loss caused by a cybercrime.