What Are First-Party and Third-Party Costs in a Cyber Attack?

July 29, 2019 Blog

Combat the Effects with a Cyber Liability Insurance Policy

Today’s consumer expects a certain level of security when they do business with you. They trust that you will protect their private and confidential data with state-of-the-art software. When a hacker or extortionist breaches your computer system, not only are they stealing, they are also putting your reputation and the future of your business on the line.

A cyber liability policy assists business owners of every size in combatting and recovering from an attack. At the Business Insurance Center, our brokers have the knowledge and experience to help you obtain the best coverage for your situation. We discuss your needs, look for any gaps, and tailor a plan for your company. We work with many industries across the United States, so we understand the nuances that are specific to you.

First-Party vs. Third-Party Costs

The world of insurance can be difficult to understand; however, we are here to educate and walk alongside our clients. When you are shopping around for your cyber liability insurance policy, you may read such terms as first-party and third-party. These are important concepts. Here is a general breakdown of what they are and who benefits from each category:

  • First-Party Costs: These are the costs directly associated with responding to a privacy breach or a security failure on your behalf. Some common items include:
    • Forensic investigations
    • Legal advice about your regulatory obligations
    • Notifying your clients of the breach
    • Providing credit monitoring because of the attack
    • Expenses related to public relations
    • Lost profit and additional expenses to cover the business interruption
  • Third-Party Costs: These costs are related to those claims made against you, including if you are sued. More specifically, they involve:
    • Legal defense
    • Paying for settlements, damages, and judgments
    • Liability to financial institutions, such as banks, when re-issuing credit and/or debit cards
    • Responding to the regulator’s inquiries
    • Fines and penalties as assessed by regulators

Costs Not Covered

As the cyber insurance landscape continually evolves in response to criminal activities, there are current items not covered. Another type of insurance policy may cover them, so be sure to speak with your Business Insurance Center broker about possible protection for:

  1. Repairing your reputation
  2. Loss of future revenue
  3. Improving internal technology systems
  4. Lost value of any of your company’s intellectual property

Gain Peace of Mind with a Cyber Liability Insurance Policy

Protect your customers’ information and hold their trust when you take cyber risks seriously with a cyber liability insurance policy. The experienced brokers at the Business Insurance Center work with many insurance companies to get you the best coverage for your needs. We will customize a package for your enterprise’s requirements. Let us help you today.

Request a quote for a cyber liability insurance policy or call and speak with a knowledgeable and experienced broker at the Business Insurance Center. We have a 24/7 call center to serve you and an online Live Chat operator. We serve the entire United States.

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